For most people, buying a car, whether it’s new or used, will be one of your biggest financial outlays. The thought of driving yourself wherever and whenever is just too much convenience for us to not take advantage of which makes the purchase of a car seem like a wise investment for the average person. But, the reality is that buying a car can come with dire financial repercussions so let’s now go over 5 ways a car makes you poor!
Number 1: Cars Depreciate in Value Drastically
To start us off is the drastic speed at which a car depreciates. Now, let’s face it. Any sane person will make an investment with the sole intention of turning a profit. This is why you’ll find serious investors flooding avenues such as real estate, the stock market, forex, and even potential business investments in order to increase their personal fortunes.
But when it comes to car ownership, you find that the opposite is true. Instead of getting high returns for your initial investment, you’ll unknowingly be throwing away a big chunk of your money the moment your car starts gaining mileage. In fact, the chances of your car appreciating in value are nil and from a business standpoint, this makes car ownership a laughable investment. In fact, from this point forward, we will refer to a car strictly as a liability as it is something that requires constant financial expenditures with the most common ones being gas, insurance and repairs. However, these costs pale in comparison to how much value you lose when you buy a new car. Within the first year alone, a new car’s value depreciates by about 15%-25% depending on the model, which means that in case you decide to sell your newly bought car after one year, you’ll only sell it for 75% of its initial price.
If you add up the amount of money you pay for the car and all the related financial charges such as interest, you’ll find that a 25% depreciation brings down the value of the car by a very significant margin, and if this isn’t making you poorer, then I don’t know what is. Now, I won’t sit here and pretend like owning a car isn’t a major convenience. Being able to go from point A to point B on your own accord is fantastic. Let’s face it, taking the bus just doesn’t stack up against having your own set of wheels and luckily, there are some ways to…