everyday family run around or the car of your dreams there will be plenty to think about before you
twist the key for the first time and drive away from the dealership. Insurance, fuel economy and
specification aside, those of us without endless cash reserves usually have to give a great deal of
thought to how we will pay for our chariot of choice.
In the good old days, thing were simple; you saved your money in a jar and would buy what you
could afford when the time was right. The financial revolution in the later part of the 20 th changed
all of that and suddenly anyone that could pass a credit check could have a new car on their
driveway sooner rather than later. This mentality of ‘buy now, worry later’ still prevails today and
many purchasers, seduced by the excitement and glamour of the dealership, sign up to a leasing or
hire-purchase deal that they can ill afford in the cold light of day. Spend an evening at a car auction
and note the plethora of repossessed BMW’s and Range Rovers as evidence.
Regardless of which type of deal you go for, chances are you will be paying over the odds if you
choose not to self-fund your car. When borrowing to make a purchase a finance company will,
understandably, charge interest on the capital borrowed. Similarly, on any hire or leasing deal
where there is a guarantee to buy the vehicle back after a period of time, the deal maker must factor
in depreciation and wear and tear into the payments you make to ensure he can still turn a profit on
the deal. No matter which way you come at the numbers, if you examine the facts you will pay over
the odds to put the metal you want on your driveway today.
The solution is simple, traditional, and almost certainly second nature to the older generations. Save
up for the car you want in advance and then go out and buy it. Thankfully, there is no need to keep
money in a jar or stuff notes under the mattress as your grandparents once did. The afore noted
financial revolution also heralded numerous savings vehicles and investment opportunities where
your money can grow while you save it. Do your research and take the time to look at savings deals
and the best ISAS to save for a car.
By taking the more patient approach, you simply save what you can truly afford each month until
you have sufficient funds to buy the car you want outright. Not only will you earn interest as you
save, but you avoid the heavy financial penalties of signing up to a deal just to get a new car that
little bit sooner. To paraphrase one of the greatest financial investors of all time, Warren Buffett,
“The stock market is the means by which wealth is transferred from the impatient to the patient”.
Truer words were never spoken and the sentiment applies to all walks of life. By saving up to fund
your new vehicle, you avoid the many financial penalties and retain complete control. Not only will
you own your car in its entirety, you can continue to save towards the next purchase several years
down the line allowing you to enjoy regular upgrades by continuously building your savings.
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