While the appeal of driving off a dealership’s lot in a brand new, out-the-box car is attractive when it comes down to it, the prospect of buying a new car really isn’t all as glamorous as it’s made out to be. This makes buying a new car not particularly a good idea for most people. Car ownership is pretty much essential for many South Africans for both work and personal purposes, but there are better ways to get yourself in a new vehicle without taking on the costs and losses of buying a new car. Not only is purchasing a new vehicle a bad investment, it really isn’t an investment at all! Investments involve assets that appreciate over time. A car starts to lose value as soon as you drive it off the lot. In fact, cars lose about 16% of their value each year – and that’s if they are well maintained! Let’s consider the facts and see what you should be doing instead.
Lower monthly payments = longer, more expensive loans
Starting with the obvious: We all know that new cars are expensive, but the desirability of these vehicles means that people are willing to sign up for exorbitant long-term loans. Now, considering that a car is already losing value as soon as you buy it, it makes no sense to commit yourself to ongoing capital and interest payments, which you keep paying as the vehicle depreciates. Many fall into the trap of opting for lower monthly payments so they can manage the cost of their new cars, but this only increases the long-term cost of the loan.
Buying based on looks
One of the biggest mistakes people make is buying a car based on looks. We are visual creatures, and we are easily swayed by aesthetic appeal. When it comes to cars, however, this is often a serious mistake. You can very easily opt for a plain-looking vehicle, at half the price – and it may even end up being more reliable in the long run. When buying a car, be practical. Focus on a vehicle’s running costs and reliability and let appearance be a secondary factor.
Shopping based on monthly payments alone
One way that people approach buying a car is to look at the monthly repayment options and compare them to their monthly budgets. If you can manage the instalments on a month-to-month basis, you may as well go for it – right? Wrong! There is much more to consider here. Think about the overall cost of the car, as well as the interest you will be paying on it, then rethink whether those attractive monthly instalments are really a good idea. As we said before, low monthly instalments lead to higher costs in the long run.
Buying a new car has few long-term benefits, if any but that doesn’t mean you shouldn’t be driving a new vehicle. Earn-a-Car offers you the possibility of buckling up in a new car, without getting parked into the pressure of buying it. Instead of considering buying a new vehicle, come to Earn-a-Car for a 24 month rent-to-own option on our new vehicles. To find out more, view our rent to own on new vehicle options now https://www.earnacar.co.za/crazy-good-rentals/ or give us a call today.