A car is unfortunately not an investment

A car is unfortunately not an investment

MIRANDA LUSIBA

This is one of the few lessons I learnt when I was working for Absa between 2006 and 2008. Recently, I came across a quote by Joshua Becker and it prompted me to write this column, it says: “Rather than defining success by the type of car that we drive, may we define it by the number of people we picked up in life and set down on a better road.”

I agree with Becker’s notion, and I believe that this is the mistake that most of us make. Yes, I agree that when you work hard, you deserve to buy yourself a nice or good car. Also, I believe that if you can afford expensive cars, then by all means spoil yourself if that’s what you prefer. What I don’t agree with however is buying a car that you cannot afford or spending money on cars alone instead of investing in property. What I also learnt during my time at Absa is that a new car loses R10 000 worth of value the minute you drive it out of a dealership.

What most of us have not realised over the years is that every time we change a car in two or three years of paying it, we end up being slaves of banks. In some cases, when you trade in a car, the value of the car at that time is not equal to the amount that you still owe. This then means that when you buy a new car using the old one as a trade-in, you essentially carry the balance of the old debt to the new car. It also means that your debt to the bank becomes a recurring decimal; and the cycle continues every time you change your car.

I guess I’d say I was lucky because I’ve never had a fascination for cars; so, for me it was more satisfying to go to the traffic department after five years to get papers that confirmed that the ownership of my car had been transferred from the bank to me. I’ve always seen a car as a necessary convenience to get me from point A to B or even C to D and nothing more. So, it was important for me to get a car that will be reliable, not heavy on petrol and that will not be too expensive to maintain. I definitely do agree with the notion that one cannot keep a car that constantly gives them problems because it becomes a costly exercise. In my 22 years of working, I’ve only owned two cars and what I’ve done well is to make sure that my car is always serviced on time and fixed whenever necessary. Because I’ve taken good care of my car for over a decade, it has taken care of me too.  

The other hard lesson that I learnt when I was at Absa – is that I worked there when the country was badly hit by a recession. The bank had to repossess at least about 10 000 a month from South Africans who were not able to pay for their cars anymore. Another tough period for us all was during last year’s hard lockdown brought by the advent of COVID-19, where a lot of people lost their jobs. These periods should essentially have taught us a lot about what’s important and if we haven’t learnt anything – then I’m afraid we might never be able to learn.

The conversation that I was having with my daughter about buying a new car is that there’s a lot that you have to consider. It is not only the monthly instalment and petrol that you have to worry about. When you buy a car depending on which brand it is, if it is a luxury car, you have to consider the fact that to service it might be very expensive, its parts might also be very expensive or even hard to get depending on where you live. So, when you budget to buy a car, you also need to think – God forbid what if I have a tyre burst? How much will it cost to buy a new tyre? If this eventuality does come true, will I have enough money to maintain this car? Some of us do not even consider all of this before buying cars.

My advice to youngsters that are starting to work is to please learn from our past mistakes. Do not buy or change cars unnecessarily or for the wrong reasons that include trying to show off. Rather invest in property because this is an asset that grows in value over-time and doesn’t lose it like a car while you’re driving it. Also, please take into consideration the fact that a car’s shelf life is also determined by whether it gets into an accident or not. So, I will leave it here to simmer – hopefully this will give all of us something to think about.

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