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September 2012 - Do you really need a new car?

Do you really need a new car?

☳ by Adam Aspilla

One of the reasons why many of us could not get out of debts is by leasing or buying a new car after the end of a car lease or after a car loan is paid in full.

Car lease could end up to sixty months as well as a car loan could also be paid in full usually up to sixty months.

Whether you are leasing or buying, after a lease is over or a car loan in paid in full,a sixty-month old car if properly maintained is still in great condition.

Having said that, driving a sixty-month old car would be financially smart decision for the following reasons:

First, if you leased the car, you have the option to purchase it at a buy-out price provided for in the lease agreement.  

In buying, your monthly payment would be much lower than a new monthly lease payment should you lease a new vehicle. Exercising your option to buy could save a decent amount of money.

Second, if you purchased the vehicle, it would be much better, for you already owned the vehicle free from any lien or encumbrance. 

You have no more monthly payment to pay, and you can save the amount you appropriated monthly for a car payment rather than being burdened to pay for another sixty months for a brand new vehicle. 

Moreover, if you will add the above savings to your RRSP contributions you can have a nest egg for the future not to mention reducing your taxable income or increasing your tax refund as the case maybe. 

The writer is driving a ten-year old car trouble-free except for the regular maintenance service. The key is to follow the service schedule specified in the Car Manual. An expert car-mechanic said, “a well-maintained car could last up to twenty years or even more”. 

One way of getting out of debt is before buying or leasing a new car you have to honesty answer this question, “Do I really need a new car?”

 

 

Adam Aspilla is a Senior Financial Counselor of the Debt Clinic of Canada Inc. and the author of the book, You Can Negotiate All Your Debts. He also writes a biweekly column, “What Matters In Life” in “Taliba Newspaper. For free initial, professional and confidential consultation, please call 905-306-7572.