Summary
If you have spare cash and an outstanding bond, DebtBusters' answer is to pay down the bond rather than buy a new car. A new vehicle loses roughly 20% of its value the moment it leaves the showroom, and replacing a car simply because its maintenance plan has expired is wasteful when servicing costs on a working car are usually lower than the interest and depreciation on a new one. Reducing the bond builds equity and a larger deposit toward a future home, and negotiating estate agent commission below the standard 7% plus VAT saves further. Disciplined home spending should have you debt-free by 50 to 55.
Do you have savings and an outstanding amount on your bond? Are considering changing your car? You may want to note the following points.
If your car is in good condition it would be a waste of money to buy a new one. A new car depreciates on average by 20% as you drive it out of the show room, so you are throwing money away instantly.
Selling your car just because the maintenance plan has run out is a common occurrence. Most cars will run very well for several years afterwards (as long the car is serviced regularly) and the maintenance costs are not as high as the interest payments and devaluation on a new car.
If you are considering selling your home then putting extra money to lower your bond means you will have a bigger deposit to put down on your new home. Always negotiate with the estate agent, as paying 7% + vat for selling your home is a lot of money and not the international norm.
Ensure you stick to a price range when purchasing a new home to make sure that the end of the loan sees you debt free by the age of 50-55. This gives you financial freedom for a time when you may want to make some serious life changes.
For further advice please contact DebtBusters on 0869 99 06 06 or have a look at our website www.debtbusters.co.za.
Let us call you back
Fill out our form below to get a free call-back from one of our consultants to discuss your debt situation.
Jump to form