Is Buying a New Car Worth It?
Automologist MAC reminds us that when we buy a new car, we don’t actually own it.
I have often heard it said that buying a used car is the second most expensive thing we will buy. Well, the person who coined that phrase obviously didn’t have to put their kids through fee-paying schools. Post-COVID19 though, attitudes towards car ownership are probably going to change.
Having not long ago swapped out a three-year-old car for a brand new one that looked, felt and smelt remarkably like the one I had just relinquished control of, I have been thinking rather a lot about car financing. This became particularly relevant as the debate raged around the office as to whether we should avail ourselves of the allegedly generous repayment holiday offered to us by the government of Malaysia to offset that or if this was really a bit of a poisoned chalice laced with bat virus from the People’s Republic.
I remember my dad getting his first new car—he wrote a cheque for the full amount after having saved money for years to be able to do so. Nowadays, when I do the school run, I marvel at all of the high-end SUVs and MPVs and sports cars or high-end German sedans, with barely an old saloon or locally manufactured offering amongst them (until you look into the teachers’ car park, that is). You may get the false impression that everyone at the school where my kids go is filthy rich—this, though, is far from the case because as the adverts on the bulletin boards would prove, most of those glittering rides are actually on finance and there are quite a few parents currently trying to reduce their monthly outgoings after those pesky bats got at us.
The percentage of households that must be staring into the face of massive automotive negative equity is massive. Society has changed in the sixty years that I have been apart of it. My Dad got paid cash twice a month and was old enough to remember the Great Depression—you know, the days before quantitative-easing and zero-percent credit. “Never a borrower or lender be” was their mantra. Today’s generation is more immediate; they want instant gratification leading to the car companies becoming, in effect, banks as they strive to maximise returns from a public that just cannot slake its thirst for the latest generation of gadgets.
If you go and buy a car from the showroom these days, you don’t in fact ever own it—you merely think you do. The easy purchase arrangements that are designed to tie you in from the cradle to the grave may be a bubble set to burst, as more and more of us who never contemplated such a massive, almost seismic, destruction of the free world economy by the Bat from Wuhan will be facing the unpleasant prospect of handing the keys in and still owing massive amounts of money to the car company.
My friends in the car business are telling me that right now, a lot of people are buying new cars as people are wary about sharing public transport to get to work and business is approaching pre-bat days. This will probably change real soon and we may well go back to a simpler time when we actually saved for our car and then kept it until the wheels fell off.