I get asked a lot, should I buy or lease. The answer always depends on the customer’s unique circumstances but there is also a third option. Let’s face it. You drive to work and your car just sits there for 8-9 hours. Then you get off and drive back home. In that case you should also be asking, do I really need that second car?
With the so called sharing economy companies like Uber and Lyft are changing the way we view transportation and car ownership. According to the State of the Automotive Finance Market the average monthly payment for a new vehicle in the second quarter of 2015 was $483. If you factor in insurance, gas, and maintenance you’re probably around $1,000 month/ $12,000 year.
I get it, not every family can manage with only one car for reasons beyond this post. But what if you could. You need to analyze your current situation and see if this opportunity makes any sense from a financial and convenience standpoint. For ex. let’s say your office is 15-20 min from you house and you could grab a ride with one of these companies and pay $20 roundtrip. So if you work 5 days a week you would pay something like $400 a month. That’s yearly savings of $7,200. I can think of a lot of things I would do with that amount of money. Your cost’s might be higher or lower only you can analyze this and decide if it makes sense.
My wife and I currently use this strategy owning only one car. It took some time getting use to but we have managed to make it work. The extra money available is mostly going towards paying off debt that is slowing us down. Its definitely not for everyone but if you can make it work depending on the savings generated it can significantly improve your finances.
I’m not even getting into the fact that you would also be helping earth by lowering air pollution. That is the subject of another post. It’s also worth noting that the State of the Automotive Finance Market also mentioned that average interest rate for a new vehicle loan was 4.8 percent and for used vehicles it was 9.1 percent. Deciding not to purchase that second car can save you money that can go towards savings, reducing current debt like student loans, and or retiring early.
We have to think and act differently if we want things to change. Challenge the status quo on everything even that second car!
Hermes Conesa CRPC®, MBA
CEO @ SimpleiVest, LLC