We all have this love story with our cars. Let’s face it, we spend a lot of time in our cars and it is a reflection of who we are for many. Take Terry and me for example, we drive this perfectly fine 8 year old Lexus with just over 66,000 km and are thinking about the next car we will possibly buy next year. “Terry, I love this car”, I told him this morning again. “Do we really need to get a new one yet? It only has 66,000 km. Isn’t it ridiculous to change it already?” Well, the car will be 9 years old next year and here comes all the rationalizing about the need to get a new one.
When it comes to consumer debt in Canada, most reports focus on the high costs of homes and mortgages across the country. But a new report from Moody’s Investors Service suggests trends in the auto sector are also troubling, read more here.
In fact, adds the outlet, the report shows “bank auto lending has grown at a compounded annual rate of 20% since 2007,” and “vehicle loans have jumped from $16.2-billion to $64-billion” over the last seven years.
The problem is not so much that we want or need a new car, the problem is that too many can’t afford what they buy. Buying the luxury car on credit is not a smart move if you have other debts and can barely make ends meet. The line between a need and a want is too often blurred.
A car is a depreciating assets, one that depreciate very fast as soon as you get it out of the dealer. Keeping your car a long time, like 10 or more years, will be as close to an “investment” as you will ever get when cars are concerned.
As for Terry and me, we have not decided yet what car we will buy and when. For now, I’m happy driving the car I love and saving monthly for the next long-term car purchase.