What if I tell you that I’ve $20,000 and I’m investing this amount in an asset that will lose 10% of the value immediately after buying the asset. Not only this, within 5 years of the investment, it will go down by more than 50% of its original value. Sounds like a great investment!
Sure, everyone does invest in this asset. You might be getting close to what I’m about to say. Yes, it’s an investment in a brand-new car. The purchase of the car makes it 10% less valuable immediately after buying it and within 5 years it is about half its value. Now things started making sense.
People stared to get on the move to gather the down payment for their dream car and willingly get in the burden of debt for next 5-7 years, just to have a convenient mode of transportation in to get your work done or simply because you want your dream car. And even if you have capacity of pay in full, it won’t be a financially wise decision. Don’t let your unnecessary wants come in the way of your financial independence.
Having a car is the need of the hour, and if you feel you really need to buy it then you could go ahead. But here’s a suggestion that will fulfill your need of a car and also make your bank account better off. Most people don’t consider the option of buying a second-hand car that suits their needs. If you buy a new car, it will not only cost more, but also you have to pay the road tax, loan processing fees and other legal fees, which in its counterpart you don’t really have to go through. Furthermore, you could invest those dollars that you would save if you buy a second-had car and increase your wealth.
Small steps like this not only helps us understand the things better, but also pave the way towards our financial independence. One more thing that could convince you to buy a second-hand car is that by doing so you will be doing a favor to the environment by preventing the damage, otherwise would have caused by production of a new car. Think about it.
Tell me in comments what do you think of this.
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