Cars are a necessity. Without them, most people would not be able to find work, buy food or commute between children and school. But cars are also a great expense and devour a large part of the income of their owners.
Before entering the automotive market, you need to honestly decide what you can afford, a calculation that includes more than self-adhesive prices.
Other costs include:
- Insurance premiums
- Taxes
- Referral fees and registration fees
- Expenditure on maintenance
- Toll and parking fees will be charged.
Most people finance their purchases and take years of monthly credit payments, which could cause more problems than owning a car solves.
Car costs should not exceed 20% of your income. Since insurance, maintenance, tolls, parking fees and other costs are part of this 20%, you should limit your car loan to less than 10% of your net salary.
Remember that the value of the car quickly decreases and the vehicle you bought last year would be much less valid today if you sold it. AAA states that depreciation generally accounts for about 40% of the annual cost of owning a car, which is on average more than $3,000 per year.
Although new cars quickly lose value, buyers often finance them with expensive long-term loans. In March 2020, the average maturity of new car loans was 70.6 months at $569 per month. Those who own more than one car face an even greater burden.
If you drive too far by car, there may not be enough money left to fund the emergency and pension accounts, and therefore it is important that you take stock.
Buy a used vehicle with money :
You can save more transportation costs by buying a cheap used car or a truck with cash. Some vehicles can be bought for just under $4,000, ie less than a year payments of $569 for the new average model.