Getting a car loan can seem like the most innocent thing to do. After all, it is a secured loan facility that you can easily weave from whenever you like. Yet like most people who are well read, i have some reasons to buy a car on loan and others why its not such a good idea. I will start with the negatives of buying a car on loan.
A car is a depreciating asset
Although a lot of Kenyans like to think of their cars as investments, I beg to differ. The moment a car leaves a showroom, its value depreciate by over 20% according to carfax. This means that the value cannot be stored in an upward appreciating manner. So when you end up with a showroom car, it will be valued below its cost immediately.
Operational costs are increasing
The cost of managing a car have been increasing yearly. According to an AAA study of five cost categories in cars – maintenance, fuel, tires, insurance and depreciation, the average cost of running a car increases by 11.26% year on year. There is no way of cutting these costs regardless of cost.
Can be used as security for loans
It is however not true that buying a car cannot have its benefits. There are many reasons to buy that car with or without a loan. According to the proprietor or this credit company in Kenya, having a car can help you in many ways. For instance, at their organization, individuals with a car qualify for a guaranteed logbook loan in Kenya up to 20 million. The only proof one needs is their car log book.
Your car is a tool to be used to make money. We all know that saving time is critical in 2019 more than ever. Yes, a car costs a dime, and you might do it with a couple of loans. But it also affords you the convenience of saving time which is the most powerful resource on the planet. So go ahead and use your car however you want. All in all, don’t break a neck for it because its just a car. But helps a great deal.