By Daryl Harris – December 8, 2014
I love the smell and the excitement of the first few months of driving a new car as much as anyone but then a bit of remorse kicks in about the 6 month mark. I hear the voices of Rich Dad Poor Dad and how a vehicle doesn’t generate cash flow and is a depreciating asset.
This is the balancing act that we all face when purchasing a new car, the emotions drive our purchase and the rational side doesn’t come into play until after the car is bought.
Based on the recent report released by Equifax in Canada, there could be a lot of remorse from Canadians after the recent borrowing and spending spree on new cars. Auto loans increased 6.8% from the previous year.
It happens so easily that people fall in love with new cars without thinking it through. I often see the aftermath of their decisions where they purchase a vehicle and finance a good portion or all of it, then can’t qualify for the home they want. They don’t realize how the car loan impacts the ability to service their mortgage.
This will only get worse if or when interest rates start increasing. If you are in the mood to buy a car, consider the impact before the emotional side of the purchase takes over.
In the meantime, settle for the “New Car” Air freshener at $2.99 to get your new car fix.