Hello Smart Stewards,
It is a beautiful and awesome day to be alive and well and we return all praises to God the Father.
Today our discussion will be centered around cars. You might be thinking ' so what is there to learn about cars'? Or better still, 'How does my car impact on my finance'? Sit back and let's take this lovely ride together. To own a car in any part of the world today is not a luxury but a necessity as it helps us to get from point A to point B faster and easily. As people begin to earn more and get more comfortable, then a car becomes a tool that must make a statement on their behalf.
As smart stewards, let's consider how we can make some savings from car buying and maintenance. It is assumed that after learning to drive, you buy your first car. At this stage, what is needed is not a power machine or a luxurious car but something nice and functional. In buying a car at this stage, some points that should be considered are: durability, size, 2nd hand value, cost of maintenance and price. As we earn more, have our own family and get very comfortable with driving, we tend to want something bigger, better and bolder.
As smart stewards learning to better manage our resources, it is very crucial to take some factors into consideration before taking decisions on the type of car we buy, So lets consider these factors in details: price, durability, 2nd hand value and maintenance Price: in buying a car, the question on most people,s mind is should they take a lease, loan or save up? Because of this price factor, many tend to go for 2nd hand cars AKA 'Tokunbo cars ' that are still in relatively good conditions because they are more affordable. Some even argue that they will rather go for the 2nd hand value of some cars than buy brand new cars of another brand. Personally, a brand new car is a brand new car .
The question that should be answered at this point is do you earn a regular income or not? People that earn regular income tend to go for the option of a loan. Make a down payment on the car and spread the instalment over a period of time but to be paid monthly. So this factor is really about where you are in your finances. If you don't have a regular income, then saving up to buy a car might be an option as you might not be able to meet up with a monthly instalment if a loan is taken to buy a car. This of course will impact your credit rating negatively. However note that regular trips to a mechanic workshop cannot be ruled out. On the other hand, if you have a regular income, there is nothing wrong with taking a loan and paying back monthly. However remember that even though you will be saving up from regular trips to a mechanic, you just might need or want a new car again by the time you are done paying up your loan then another race begins. ( rat race things).
For those that can afford to pay for a car out right without a loan, why not? Please go for it however don't forget to consider the durability and cost of maintenance. Durability/ 2nd hand value: For my sisters in Nigeria, we know that this is a very important factor to consider when buying a car. Some brands are known to be very durable and has low maintenance cost but are more expensive at the time of buying it. Some cars on the other hand are cheaper to buy but more expensive to maintain.
How then do we balance this especially if at the time of buying, you don't have enough money to cover the cost of a more expensive car with less maintenance cost. From my personal experience, I will rather wait and buy a more expensive car with less maintenance cost and higher 2nd hand value. How do I know this? In buying my current car I went for a cheaper brand and price but have had to spend so much more on maintenance. If I had waited and saved up a little more, I would have saved more, both in monetary and emotional terms but then different stroke for different folks Maintenance: where do you service your car? There is a popular saying 'penny wise, pound foolish'. Personal, I belong to the school of thought that place higher emphasis on 'value' than 'price' but then value is relative. What is valuable to me might not be valuable to the next person. What I am saying in essence is that getting a good and registered mechanic is more rewarding in the long run. I had an experience a while back that I will share with us.
When I just got my current car then and driven it for less than a year, the car drove very well but will just make up her mind to stop in the middle of the road without any warning and it won't start again until after about 30mins wait. In retrospect, I would have been better off going to the brands' service shop or any of the popular service shops, paid more money and saved myself a lot of headache. However I opted for a roadside mechanic who decided to turn me to his personal ATM. He would pick the car take it for days and return it with a promise that the car was in perfect condition. Of course few days down the line I will have the same experience again until I decided to go to a proper service shop. I lost a lot of money when I thought I was going for a cheaper option and got embarrassed a lot of times when my car went off in the middle of nowhere. I even considered selling it off at a point. In the end, I went back to a service station and they bought the solution at just N6,000 after that roadside guy had swerved me off thousands of naira. I need not say more after this.
With these few points of mine, I trust that as smart stewards, we will take time to make better decisions when buying a car or for regular maintenance till we get to our destinations of owning a dream car.
On a daily basis, we feature words of financial wisdom from different Smart Stewards members and sometimes from Guest Contributors. You'd be glad reading them. Enjoy!
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