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Why Cars are Liabilities, Not Assets

By Charles Hopkins Published 09/19/2006 | Entrepreneur

When were young, one of the things most of us dream of is buying our first car. For a teenager, tolling around town in their own wheels seems like the ideal situation. For an adult who has already owned a few vehicles, they recognize that there is much more to owning a car than driving down the road looking great.

Cars cost money, in fact, they cost a lot of money. This is true whether you purchase a new or used car. Virtually everyone who has owned a vehicle has spent money they didnt want to spend on maintaining it.

Although cars do cost money its certainly not as simple as saying that you wont drive. Unless you live in a spot where you can walk to every destination you are going to need some form of personal transportation.

Leasing a vehicle is actually the preferred choice of many individuals and in some cases those are the individuals who are enjoying the brightest financial future.

A car that you own yourself is actually a liability and not an asset. Consider the fact that the moment you drive a new car off the lot, its value has already diminished considerably. The majority of people who do purchase new cars are going to have to secure some form of financing for it. This automatically involves paying interest which means that the car is costing you more than you first allotted for.

Although new cars do come with a warranty, inevitably something will go wrong and youll have to cover the expenses of having to repair it. If you are fortunate, the repairs wont be terribly costly, but even if they are, that is still money that you have to invest in the vehicle.

In the case of a leased car that outcome can be much different. Granted you are going to pay a fee each month to lease the car but you are going to save in many other areas. Most leased vehicles come with a very extensive warranty that translates to you not having to pay for any repairs.

Some individuals will argue that leasing a vehicle is akin to throwing money away. After all, at the end of the lease you have nothing to show for your money. Its important to consider though that when you do lease you know exactly what you are paying for and you are not going to be stuck with unexpected repair and maintenance costs that may seem to be constantly occurring.  

Before you head out to purchase a vehicle, think about how much it will actually cost you over the course of your ownership. If you arent willing to invest a small fortune to have a car to call your own, consider leasing a new vehicle every two or three years. It will ultimately save you money, as well as, allow you to drive with the comfort of knowing that you arent wasting your hard earned money on your vehicle.