Cars are a necessary asset nowadays. It’s in every family’s goal to purchase at least one car, and many who buy a car argue pretty quickly that it can save them money. However, this isn’t entirely the case. Most of the time, purchasing a car can cost you a lot more money in the future.
About 90 percent of the US population owns a car, and authorities estimate that people spend at least 100 minutes every day inside their vehicle. People love their cars, and there is no doubt about that. But for those planning to purchase a car thinking that it’s a necessity, you’ll have to think again.
The Problems With Purchasing a Car
Cars are a great addition to your households, and often, this improves your financial standing. But there are a few things you need to know before you purchase your first car.
It’s Not a Necessity
Purchasing a car is not a necessity, not a long shot. Unfortunately, society has made us think of it that way because it’s one way to sell such an expensive item. Auto vehicle manufacturers and banks are all in it. They work together to make cars an essential investment for every family, and they’ve made it a norm.
Think about it for a second. With so much access to commuting options, including public buses and such, why are cars such a necessity? In reality, you can save so much more using those commuting options every day. Moreover, it’s also even more convenient. You don’t have to drive the vehicle or navigate through busy streets. When you commute, you have to sit back and relax.
Moreover, the pandemic has left many people with cars paying for an asset they won’t be using as much. So during this pandemic, it’s better to sell your car and commute instead.
It’s Not an Investment
Another common issue with people purchasing a car is that it’s an investment. People think they can sell their car in the future anyway, so it’s a good purchase. But no, you can neither sell your vehicle quickly in the market today nor will you ever make a profit out of it.
Cars depreciate over time and much faster than any other asset in the market. It’s likely to lose its value by more than half during the first five years. After the first ten, you’re technically selling an item that no one wants at that point. So thinking of a car as an investment is a mistake. How about luxury cars? Even worse. Experts believe that luxury cars are the fastest to depreciate in the automotive market. So unless you’re buying a car that’s one of its kind, you shouldn’t purchase any vehicle as an investment.
So purchasing a car is not ideal. You’re technically purchasing an asset you have to keep safe and maintain, with zero financial gains or return. The only thing that makes it worthwhile is the fact that you can now go anywhere—as long as you pay for the expensive gas that comes with it and drive for hours on end. At this point, it’s no longer an asset. It’s a liability. But is there a way to purchase a car without wasting money?
How to Save Money When Purchasing a Vehicle
While you’re still spending your hard-earned money on a vehicle, you’re also saving some money you can use elsewhere. Here are a few ways you can buy a vehicle without breaking the bank.
Pay in Cash
Interest is the killer here and always remember that. For a car, expect that you spend at least thousands of dollars paying for the interest instead of paying for the car itself. Save yourself that burden, save up, and purchase a car with cash. It’s a much better choice. And compared to buying a house, it’s more feasible.
Take Proactive Measures
Always save up enough money for car maintenance. If you can’t afford to save at least half of your car’s overall cost in over a year or so, then you shouldn’t purchase a car, ever. So make sure to take proactive measures when you can.
Insurance and Lawyers
Insurance plays a significant role in saving money for your car purchase. Another factor that plays a significant role in saving money is getting a lawyer. Surprisingly enough, getting a lawyer specializing in car accidents early into your purchase can save you a decent amount of money. They can give you tips and tricks regarding what you should do to avoid accidents and help you figure out insurance plans for your vehicle. Extra tip: paying for an accident can easily cost more than your car, so make sure to do this before you even think of buying one.
Purchase a Vehicle After its First Five Years
Lastly, it’s better to purchase a used vehicle. By skipping on the first five years of depreciation, you technically have nothing to lose. Furthermore, car models released five years ago are much cheaper than brand-new car models released recently.
So with these things in mind, you can save yourself a lot of money when purchasing a car. It doesn’t change the fact that it’s still an asset you’re losing money on, but at least you’re saving a lot of money from it.