I wouldnât consider myself a tomboy but Iâve always had a specialty for identifying what brand a car is just from the logo or style of the lights.
That is my special talent besides picking out a demented Elmo pasta from my mac n cheese.
Is it just me or do you see different types of expressions and a face made the car lights and license plate?
Anyway, cars are simply to get you from Point A to B safely and hopefully are efficient especially if you drive a Tesla conserving gas.
But cars, similarly to homes and our clothes, have become a sign of âfakeâ status.
As much as this is hard to believe, the type of car you drive has nothing to do with your financial situation.
It isnât hard to finance a car with debt and even though it is the worst type of debt since a car depreciates the moment you drive it off the lot, most people don’t seem to care because we value impressing others > our finances until it hits you like a ton of bricks and finally change.
When my family moved to the states, we first got an Audi Q3. Compact, small suburban good for off-road pebbles and screws and NYC potholes. But we knew there needed to be something more reliable since the older it got, the more repairs, maintenance, and overall cost of it skyrocketed.
It wasnât worth it, but to our neighbors, it looked different.
It was a status symbol back in the 2000s.
Something besides a house that we could show off until we realized that our bank account didnât care what otherâs thought.
We knew after spending 50k on new windshield wipers, lights, and interior seats for the car, it was the worst decision we had ever made.
Plus the only questions that were going through our head included:
-Where should we park this in case it gets stolen?
-Should we roll down the windows so people see who were are?
-Do we really have to park far away just in case a shopping cart or another car doesn’t scratch the Audi?
At the end of the day, you have to do whatâs best for you and although you might look cooler, chick, or whatever you think, no one will fix your problems.
The more expensive anything is, the more problems and maintenance it will require.
The bigger dreams we have, the harder work and more grueling hours we need to put in.
If you are realistic and value the decisions you make, then you will understand that buying a car needs to be taken seriously not for fun.
Just like investing.
It shouldn’t be fun. Instead of hating your job, put effort into enjoying it again and not your portfolio.
It isn’t gambling, it is to actually make progress with your money.
Sure, we could have easily purchased a Porsche or Range Rover but why?
That wonât bring us more joy, get us faster or future possibilities.
Even with no complete fully-fledged auto-pilot, we still had to hold the wheel on the cars.
Only eyes, troubles, expenses and fake glam.
You can make better decisions than that.
Since the Audi days, you may be shocked but we changed cars already two times.
We tried to avoid that but since the next one was getting out of shape, we upgraded to our latest car, the Volvo XC60.
It is moderately priced, has great safety features, auto-pilot for the highways, and really comfortable for long road trips, the things we never do.
Anyway, buying a car is a must because you donât want to rely on car services such as Uber and Lyft every time you go somewhere.
It isnât convenient, sometimes not safe, especially not during a pandemic and for women under 21 and just a hassle to determine the right tip, awkward conversation throughout, and silence part of the Uber experience.
Things I always dread after each ride.
A car wouldnât be a better investment but something that would make life easier.
You always have to weigh opportunity cost becuase your time is on the line.
As an NYU student who commutes from Westchester, I knew it would be a waste of money to rent or live in a dorm if I could just spend 3 hours commuting each day.
Yet, that itself can be argued a waste of time unless I study and be productive on the train and subway which I do.
With a car, if it will save you the hassle and annoyance of renting and getting on a combined 6 buses and trains to work, it is worth the investment to purchase a piece of metal that can get you somewhere.
It isnât a luxury piece, it is a transportation and should be treated only that way.
You never shop for a car, you investigate or browse.
Is a Car Worth It?
Well, it certainly isnât considered an investment but if you believe it will save you time, energy, and get you out of the house for a relaxing mental break and alone time, especially these days, it can be worth it.
Especially in the suburbs, I see many families owning more than 2 cars.
In Europe that is certainly not normal as public transportation is the only way to get around along with walking, something, LA has never adopted only the coyotes on the trails.
Ask Yourself These Questions:
-How much are you driving?
-Is public transportation available around you? Are you comfortable with it?
-Have you tried walking?
-Where are you going to store the car? Is it an extra fee per month for your apartment building?
-Consider insurance, maintenance, registry fees, license plate charge, and or possible accessories such as cushions so your dog doesnât scratch the seats and your morning brew doesnât spill.
-More features such as auto-pilot and dashboard analytics mean more money down
Reasons Why Not To Buy a Car:
-Emotional Connection
-Status symbol
-Impulse buy
-Laziness to walk or use public transit
Remember, it is harder to get rid of a car, pay monthly insurance, and go through all the hassle of paperwork than actually make the transaction.
As with any large purchase, remember to wait at least 72 hours up to a month in advance once it becomes a serious decision.
Car browse and take your time.
Models will always be available.
Car dealers and salespeople are very pushy.
Donât let that get in the way of you making the best decision for yourself not their pockets.
Leasing 101:
Similarly to renting, you are renting from the dealer for a certain period of time.
Usually, 36 to 48 months is the most common.
After that, you have the option ot return the vehicle to the dealer or purchasing the vehicle at a pre-determined amount.
There is no loan, just a fixed payment that you pay each month to lease it.
Lease Pros:
-Anyone who drives less than 5x a week
-Unsure about making a big purchase of buying
-Still testing out the model
-Learning how to try
-Temporarily staying in 1 place since
-Doesnât rely on it too heavily for work
-Doesnât take big road trips
-More warranty coverage
-Lower down payment
-Latest tech in a new car every few years
-Worry-free maintenance-many new cars offer a warranty that lasts at least 3 years, so most repairs should be covered
-No resale worries
-Maximising tax deductions: if you use your car for business purposes even to drive to your renterâs house, a lease will often afford you more tax write-offs than a loan.
Why?
The IRA allows you to deduct both the depreciation and the financing costs that are part of each monthly payments
-Monthly payments for a lease are lower than for a loan on a new vehicle
-Require down payment: The more you put down initially, the lower your lease payment will be
How are the Payments Calculated?
Based on the sale price, the interest rate, and the number of months it will take to repay the loan
Lease Cons:
-More expensive upfront
-If you drive less, each ride costs roughly $200
-No future return
-Deals are limited
-Hard to lease with bad credit
-Need gap insurance: If a vehicle is stolen or declared a total loss in value
-Mileage limit
-Donât own the vehicle
-Monthly payments
-No customization
-Not building up any equity = even though vehicles never appreciate in value (unless antique that is never driven), you still get cashback if it is in decent condition
REMEMBER: Everything can be negotiated in life.
Nothing is set in stone unless it is in the constitution and in 2020, rules in there have even been broken a couple of times by Donald.
What Can Be Negotiated:
-Sale Price
-Length of Lease
-Expected Mileage: The lease sets a certain max number of miles you can drive the car each month or year.
-It is expected for the lease to come with a 10k mile annual allotment
If you go over, the monthly payment will increase slightly
-Residual value: Value of the vehicle at the end of the lease-with depreciation figured in
-Rent Charge: Fee of the interest charged to borrow
-Taxes and Fees: These are fixed and usually cannot be changed.
These affect the monthly cost.
Buying 101:
Obviously buying a car is more expensive since you have to pay the entire purchase price of the vehicle.
But once you pay off your loans and the end of the payment, there is always equity in the car that can be used either towards the purchase of a new car or selling it for a decent amount of change when you are ready for a new one.
Pros:
What Are the Benefits of Buying a Car?
Buying a car has its own pros and cons as well which are very similar to leasing.
Some of the positives of buying a car include:
-You own the car.
-You can drive as much as you want.
-You can get cash to pay for your next car.
-You can make it your own.
-You wonât have to make payments when the loan is paid off.
-You can sell on your own schedule.
-Financing is easier than leasing.
-Refinancing can save you money down the road.
-You can fix it or not.
As with pros, there are always cons:
-Buying a car is more expensive in the short term.
-You have to pay interest on the entire cost of the car.
-You may have to pay more sales tax.
-You should make a large down payment.
-The carâs future value is unknown.
-The warranty will end.
In essence, financing in full is easier than leasing.
The process is speedier because you guessed it, it costs more and there are more financing options available than for leasing since it is a quicker process and less selection.
Overall, the option you choose solely depends on your financial situation, your future needs, and your wants.
It is completely individualized and each option has its own drawbacks.
I hope I clarified and made these details succinct and a bit easier for you when you buy your next Beetle.
Cheers!
MIA