Hey guys,
So recently I've been reading the Mr Money Moustache blog (dangerous I know) and I'm thinking there are some changes I need to make the way I spend my money - especially my car.
I love my car, but it is difficult to justify spending so much money per month on a car. I have a Peugeot 208 HDI Active, which I bought last year brand new. I got a discount on it, but the only deposit I made on the car was the R15k I got for my trade in. I think I bought it somewhere around August.
The repayments are costing me R4500 per month, and vehicle insurance is about R950 if I remember correct. So, R5450 on a vehicle.
The capital balance outstanding is R180k. Pretty sure that if I were to trade it in now, I would get something like R150k. So, that would be R30k I would need to borrow in order to trade my car in (lol, I know!)
What I would buy then would be something in the region of R70k. A small car, such as a Hyundai Getz, with a 1.4l engine. So I would owe R100k in finance as opposed to R180k. Assuming that amount is financed at my current interest rate of 10.4 with a 48 month loan term, it would cost me R2500 per month. However, my insurance costs would probaby decrease by R500 (conservatively). So, I would pay R2950 per month instead of R5450.
That R2500 per month I could put into repaying the vehicle loan faster, and then have it paid for fully in 1.82 years - or close to the end of 2016. I could put even more into it, depending on other financial commitments (paying for studies, etc).
However, that isn't taking into account the increased servicing costs of the second hand car, which would not have a service plan. Over the lifetime of the vehicle, that would increase the costs slightly. Nonetheless, it would still be quite a big saving of cash.
So, I have a few questions.
The first is, is it worth it? I would be taking a risk in that it can be difficult to find a reliable second hand car. I could end up with someone else's problems. That could end up costing me more money, or it could leave me stranded on the side of the road. However, I think the risk is lower with a small car such as a Hyundai Getz or a Toyota Yaris.
The second is, how would one go about making sure that a second hand car is reliable? I mean, I don't know enough about cars to give one a proper inspection. I know the AA does inspections - are those worth anything?
So recently I've been reading the Mr Money Moustache blog (dangerous I know) and I'm thinking there are some changes I need to make the way I spend my money - especially my car.
I love my car, but it is difficult to justify spending so much money per month on a car. I have a Peugeot 208 HDI Active, which I bought last year brand new. I got a discount on it, but the only deposit I made on the car was the R15k I got for my trade in. I think I bought it somewhere around August.
The repayments are costing me R4500 per month, and vehicle insurance is about R950 if I remember correct. So, R5450 on a vehicle.
The capital balance outstanding is R180k. Pretty sure that if I were to trade it in now, I would get something like R150k. So, that would be R30k I would need to borrow in order to trade my car in (lol, I know!)
What I would buy then would be something in the region of R70k. A small car, such as a Hyundai Getz, with a 1.4l engine. So I would owe R100k in finance as opposed to R180k. Assuming that amount is financed at my current interest rate of 10.4 with a 48 month loan term, it would cost me R2500 per month. However, my insurance costs would probaby decrease by R500 (conservatively). So, I would pay R2950 per month instead of R5450.
That R2500 per month I could put into repaying the vehicle loan faster, and then have it paid for fully in 1.82 years - or close to the end of 2016. I could put even more into it, depending on other financial commitments (paying for studies, etc).
However, that isn't taking into account the increased servicing costs of the second hand car, which would not have a service plan. Over the lifetime of the vehicle, that would increase the costs slightly. Nonetheless, it would still be quite a big saving of cash.
So, I have a few questions.
The first is, is it worth it? I would be taking a risk in that it can be difficult to find a reliable second hand car. I could end up with someone else's problems. That could end up costing me more money, or it could leave me stranded on the side of the road. However, I think the risk is lower with a small car such as a Hyundai Getz or a Toyota Yaris.
The second is, how would one go about making sure that a second hand car is reliable? I mean, I don't know enough about cars to give one a proper inspection. I know the AA does inspections - are those worth anything?
