4 Reasons Why You Should Continue Driving Your Old Car
It’s so tempting to buy a new car, isn’t it? You just can’t beat the feeling of that new car smell and the thrill of putting your foot flat on the accelerator. So should you look to buy that new car, or simply drive the one you’ve had for the last couple of years? In this article we look at the benefits of just hanging onto the car you are driving at the moment.
- Your Insurance Premiums Are Cheaper
It’s a fact. The insurance premiums
you pay on your car are directly proportionate to the value of your car. The more your car costs, the more expensive your premiums are. If you are in the market for a new car, just know that you are going to need to factor in more of your monthly take-home money to increased car insurance premiums.
- A New Car Depreciates Quicker Than An Older Car
That brand new car you have your eye on is going to depreciate as much as 30% the minute you drive it off the showroom floor. It goes from “brand new” to “second hand” in about 90 seconds. It’s important to know that a car is an asset, but it is a depreciating asset (it’s losing value). Older cars also depreciate, but at a much slower rate than new cars. Once your car reaches a certain age, well it just kinda holds its value (provided you keep the mileage at a reasonable amount). You should be asking yourself this question: Are you looking to build assets that appreciate in value, or invest money into assets that are always losing value? A car, unfortunately, is an asset which just keeps losing value.
- You Could Be Investing The Money You Are Paying In Car Instalments
A brand new car is likely to cost you in the region of R5000 per month (min). Forget the insurance
costs of R1000 and the cost of rising fuel. What if you invested that money over 5 years instead of putting it into an asset that is depreciating? Without any growth, that investment would be worth a minimum of R300 000. Wouldn’t this be a smarter play with your money?
- Expensive Cars Are Expensive To Maintain
If you have ever owned a luxury car, you will know what it costs if something suddenly breaks. The bottom line is that older cars (if maintained properly) cost far less to maintain that expensive cars. If you decide to buy a new car, you are probably going to take the additional service and maintenance package (at an additional cost which is added to the total financed amount). And that’s cool, until you have done more than 120 000 km and then your service / motor warranty plan is up and you need to either risk driving without cover or pay another R30 000 for a new package. The costs of owning a new car just keep adding up. The benefit of driving an older car is that they are cheaper to maintain.
Unfortunately in SA, because we don’t have a reliable public transport system, we are forced to own a car (sometimes more than one in a family) and with that car ownership comes with a host of expenses we just need to keep coughing up. And we are also in the habit of driving a car for 5 years then trading it in for a new model, which means we never actually own our cars outright. We just keep paying the bank huge amounts of interest for the luxury of getting around town in something we believe we can be ‘seen’ in.
Do the smart thing, drive your old car and love it like you would a new one.
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