On my way to work this morning, I was thinking how can I
make more money? A lot of ideas popped into my head while I was waiting in
traffic. Then just randomly I saw a luxury sedan that I wished I could own and
wondered how I could afford that. I then started to take more notice of the
cars on the road today.
I love cars and if I was rich enough that would be my
indulgence. I stopped thinking of my ways to make money so I could concentrate
on other people’s wheels. In the short distance from my wife’s office to mine,
approximately 20 minutes drive. I counted 3 German saloons that I know are
quite new on the market and their price is similar to that of a townhouse. I
lost count of the SUVs that drove by, one particular model even the basic
baseline model is probably worth 3-4 times my annual salary. I noticed 2 Porsches
and various other sports cars that are not that old on the car market.
This made me think, either there are a lot more “Rich”
people in our area or they have purchased these vehicles on a credit plan that
involves them to almost sell a kidney (maybe they did). The vehicle dealers are
now able to market the un-reachable cars to the general public. They use the
buy now pay later methods or attach a residual value to the finance agreement,
or finance the vehicle over a ridiculously long period.
I never really took notice of the car ads on the radio or TV,
but I now know why they promote the new models as if we cannot live without
them. And I also know now that at the end of the ad when they disclose the
finance terms, they say them so fast you cannot really understand them. So the
unsuspecting or excited consumer goes to that dealership to enquire about the
deal. The salesman doing their job, would tell the consumer about all the
benefits and paint a pretty picture convincing the buyer this is all he or she
needs to be current with all the cool kids.
When the finance part of the deal is to be dealt with, that
is done so quickly because the prospective buyer is so hyped they will sign
almost anything at that stage. They will probably finance the deal so that the
vehicle becomes affordable each
month, and then worry about the balloon or residual payment at the end of the
term at a later time. For example most residuals are 30% of the vehicles value
(NEW). At the end of the term X years the consumer must pay that back, as a
single lump sum payment or re-finance the owing 30% for another X years. Some
people have said I will save up the 30% over the term in the bank and pay it
when the time comes. Honestly how many people actually stick to that? Or sell
the vehicle when the final payment is due and then do the same deal for the
next car. That could work for business use and a tax write off, but for the
individual they will always be in debt.
If I were to buy another vehicle I would save the biggest
deposit I could, negotiate for the best deal I can on a sensible car and then
make all efforts to pay it down as soon as possible. Or keep my current vehicle
if it is paid off and start saving each month for the next car that I could
purchase cash in a few years time.
Remember the vehicles you buy do not appreciate in value,
unless you own the original Gull wing Mercedes or a particular car a movie star
owned.
Tomorrow morning when I drive to work, I will notice those
vehicles again and the people driving them. I will be grateful that I am not
paying a third of my salary on a car that uses so much fuel and costs so much
to maintain. People will argue with me saying but if they can afford the car
why try cause a fight about it. My response will be: If you had to manipulate
the finance terms so it became affordable to you then you cannot afford it.
Granted some people may well have bought those cars cash,
some of them may have no debt whatsoever or they may actually be rich enough to
buy whatever they want. I did say some
people because the majority of the population are not rich and cannot afford
those vehicles / houses / clothes etc.
I hope you enjoyed this article, please feel free to comment
or submit your own experiences.
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