Many people like to buy a car and drive it. This is because they enjoy the freedom of owning their own mode of transport and also styling it according to their wishes; we all love our cars! But most of us don't think about the logistics involved in buying and owning a car. The initial cost, running costs, and most importantly, the time required for owning a car are unsung heroes when it comes to taking on ownership of a vehicle.
Cars are among the most expensive assets that we own. On average, a car loses almost 35 percent of its value in the first three years and then another 50 percent by the time it is five years old. After this, a car's value decreases at a much slower rate making it quite difficult to sell off, especially if you wish to get back some money for your next vehicle since cars depreciate in value rapidly once they've crossed their early stages of life! The reason why it takes so long to sell off used cars is that people look for specific models only when they're on the lookout for buying second-hand cars or pre-owned vehicles. So if you want to sell off your car earlier than that, you may end up getting back only around half of its true market value. Read More
A more effective way to sell off your car is to wait until it gets older, and used cars can be sold for good prices. But this requires a lot of patience (which most people don't have) and also requires you to continue paying insurance premiums as well as property taxes on the car even after you've handed over the car keys to someone else. I'd suggest that if possible, just rent out your house!
On average, almost $13000 is required for owning a car per year which includes the cost of fuel, maintenance, and also repairs in case something goes wrong with the vehicle. What this means is that it requires at least $2000 per month for owning a car!
So should you still go ahead and buy one?
You should only buy a car if the benefits outweigh the initial cost. I'd suggest buying your first car only after you've saved up enough money to repay the loan amount quickly. This is because used cars are usually financed by banks or dealerships. And since most people just leave their cars sitting in the garage once they've paid off their loans, it would be better if you could pay back your debt faster so that you don't have to pay interest rates on anything other than the actual amount of money being borrowed from lenders. People who opt for short-term loans usually end up paying higher-than-average interest rates on their debts. I'd suggest taking a loan only when you can repay it within the tenure of the loan itself.
If possible, try borrowing money to buy your first car from your parents or relatives who are willing to help you out! This is because most lenders these days will not be interested in giving loans to teenagers or people in their twenties with no steady source of income. And they're also more likely to go after borrowers who've just started working and don't have any way of getting back the loan amount if something goes wrong. So try borrowing money from friends and family members instead since they're less likely to ask for paying back the entire debt at once, especially if they know that you'll be using this vehicle strictly for your own personal use.
Fixed deposit savings accounts are a good option for people who want to buy a car in the near future but have no idea how to save up enough money for it! Fixed deposits are tamper-proof, and you can manage them online from anywhere in the world. Also, almost all nationalized banks provide attractive interest rates when it comes to fixed deposit accounts, which may help you earn back some of your initial investment.