Should I Buy a Car? Factors to Consider

You may be wondering, “Should I buy a car?”. Did you know that, outside of buying a home, this will be the most expensive acquisition you’ll ever make? When purchasing a car, you’ll make important decisions that will impact your immediate and long-term finances. That’s why it’s best to consider several important factors before settling on anything.

#1 Buying a Car Will Affect Your Savings Rate

Buying a car will impact your ability to save. Total costs of ownership add up quickly. You are likely to purchase multiple vehicles over a lifetime. That is why owning a car can eliminate at least a million dollars in future value from a retirement account. The money you use to buy a car is money that is not available for saving or investing.

#2 A Car Is a Depreciating Asset

A car is an asset. Assets can be sold, and your vehicle is no exception. In an emergency, you can leverage your car for the money, which you can then use to alleviate the crisis.

However, the vehicle is a depreciating asset that doesn’t provide any returns. A car’s value decreases with time. Depreciation is usually 15%-18% on average. Coupled with the ongoing expenses, the vehicle looks more like a liability rather than an asset.

#3 Emotional and Rational Aspects of Buying a Car

Purchasing a car can be a very emotional decision. Perhaps owning a car makes you happy and you can’t put a price on it. Emotions are valid, and you need to be aware of them and take them into account when making your decision.

If you don’t really care about the car and just want to make the best financial choice, perhaps you don’t really need a car and can use mass transit and Uber to meet your transportation needs.


When debating over whether you should buy a car, carefully take all puzzle pieces into account: your retirement, total cost of ownership, and emotional factors. This way, you can stay in the “driver’s seat” by making an informed decision.

Roman Zelvenschi

I started a digital marketing agency Romanz Media Group Inc. 12 years ago. Running my own business quickly taught me the importance of cash flow. Making sales was not enough, I had to have money in the bank to pay the vendors, staff and personal bills.

During those early stages of the company I learned how to get creative with debt and to save on interest cost. I paid for everything I could with a credit card to both get more points and to extend the payment date by 25 days (credit card grace period). I then utilized a 0% balance transfer offers to rotate this debt.

I learned a lot during this process and made a lot of mistakes. My key lesson is that the most important part of being financially independent is how much I managed to save, rather than how much I earned. Staying disciplined with savings and tracking spending is not easy and I tried many different methods to stay on track.

FinancialFreedom.Guru is a side project where I and my staff are trying to share the practical knowledge on how to understand finances and to build wealth.