Owning a car is the second-top priority of most people. Many millennials may not be into car ownership due to their different priorities. But for those that made the investment, they often have regrets after a series of bad decisions. This goes beyond buying a car they can’t comfortably afford.
It is crucial that car buyers do due diligence to make the most out of their car-buying experience. But even this tech-loving generational cohort often ends up having car ownership regrets. The following are three of their biggest regrets when buying and owning their own cars and what we can learn from each one.
Ignoring the 1/10th Rule
According to a finance expert, the best way to buy a car is by following the 1/10th rule. This means one should only be spending up to 10% of their gross annual income when purchasing a car. This way, one can comfortably afford the purchase, save money, and pay for their other expenses.
For example, your gross annual income is about $50,000. Your car-buying budget limit should only be up to $5,000. But then, most millennial car buyers take car loans that are far more than 10% of their annual income.
According to reports, up to 20% of car buyers take up to $50,000 worth of car loans or more. Remember that aside from the monthly car loan payments, you will still have to pay the interest fees. One will still have to budget their remaining income for their other expenses, including car maintenance and repairs.
Millennials must do a hard financial check before taking out a car loan. As much as possible, follow the 1/10th rule. This will give you better peace of mind knowing you can afford to make the necessary payments along with the ongoing costs of car ownership.
Thinking Car Maintenance Is a Luxury
Cars are just like houses. When you fail to take great care of your car, its physical condition and value will quickly deteriorate. The best way to preserve the beauty, value, and efficiency of your car is through preventive maintenance.
But then, many millennials were surprised after learning the real costs of car ownership. When they first bought a car, they did not anticipate how much money they need aside from their monthly car payments and gas. They failed to factor in the car insurance costs, registration fees, taxes and miscellaneous fees, and maintenance and repairs.
It is crucial that all car owners invest in car maintenance. Don’t wait for your car to break down before taking it to a local mechanic. Learn the basics of car upkeep and let the pros do the necessary repairs before it becomes too late.
It also helps to invest in certain upgrades that can help you better protect your car against environmental factors. For instance, invest in an all-weather floor liner custom-fitted for your vehicle. This will ensure that your car’s original carpet will stay protected all year round, no matter the weather.
Don’t forget to save a separate emergency fund for car repairs. This way, you already have something you can rely on in case of unexpected car repair costs. Saving at least $50 each month is always a good start.
Indulging in Unnecessary Car Upgrade
Millennials, like everyone, would be willing to spend on a better, brand new car once the opportunity presents itself. They know that these days, cars are a necessity. They also treat their vehicles as a way to boost their career.
They invest in cars to enjoy better flexibility when traveling and in getting to and from their workplace. They invest in cars that match their reputation at work. Millennials also use their passion for cars as motivation to do better at work.
But then, many car owners would say yes to a car upgrade even if this is unnecessary. Just because you can buy a new car does not already mean you should. While you still make the call, it helps to take into consideration the other things involved.
When it comes to a car upgrade, you may have to undergo the whole car loan application process all over again. This can also mean higher car ownership costs. Weight the perks and drawbacks of making a car upgrade now before you make a decision.
Car ownership is one thing many of us dream of obtaining. Aside from a house, we consider cars to be another must-have. Before buying a car and making another upgrade, be sure to consider all variables involved. This way, you can avoid falling victim to these car ownership regret triggers.