But in regards to the math..... compare a 10,000 dollar mortgage versus the
10,000 car loan with applicable rates. Nowhere did I say that one should
use refinancing money to pay off other debts. The other debts themselves to
be paid off quicker if at a higher interest rate is what I said, even if I
didn't make that painfully clear.

Ryan


OK, let's do the math.

Suppose someone goes out and buys a new car and finances $10,000 of its
price
at, say, 8% for 4 years. Their monthly payment will be $244.13 (thank you,
Quicken98) and the total cost of that $10,000 will be $11,718.24. $1718.24
of
interest.

Now suppose instead they tacked $10,000 onto a home refinance and bought
the
car for cash. Suppose they can get 5% for 30 years. Their monthly payment
increases by only $53.68 - but it does so for three decades! Total cost of
that
$10,000 is $19324.80 - that's $9324.80 of interest, even though the rate
is
much lower.

Of course the situation is muddied by the fact that you pay over a much
longer
period of time, but it's doubtful that the car will last 30 years. It's
further
muddied by tax considerations, and whether/when the borrowers can expect
increases in their income.

Most of all, there's the philosophical question of incurring long-term
debt for
a short-term purchase.