So this is Greg's 2008 Suzuki SX4. Pretty awful aye!!
We're often giving Greg stick about it and telling him to buy something new but then it struck us. Why does it matter and Greg might have a reason for wanting to keep it.
Greg is a really, really good mortgage advisor and he and his wife together make a good living from it so he could easily afford to buy something new either with savings, a home loan top up or even car finance so why doesn't he?
Currently Greg and his wife are working through some investment options in property and other investments and so keeping this car, keeping cash available and not taking on any more lending for a new vehicle is a higher priority than having a newer vehicle.
Options
In finances, everything is about choices. We all need transport in some way shape or form so we get that most people need a car to get around. It's part of everyday life. However, there are levels to cars. We also get that often newer cars are more efficient on fuel, better for the environment and cost less to service and repair. However, there is a limit to this.
Greg's car is cheap to run, cheap to fix and hasn't had any major work in its entire life so the old adage of "if it ain't broken, why fix it" comes to mind.
Yes, a new Tesla would save on running expenses but at $60K+ purchase price, thats a lot of tanks of fuel needed to save the purchase price. A second hand $15K late model something may look better but is that $15K better used elsewhere at the moment.
It's all about options.
What does that practically mean?
That $60K in home loan top up for a Tesla could mean that Greg is unable to get the new lending to settle on his latest investment property he is building. That $15K car finance would drop the amount of lending he could get by around $90K. Spending savings on the car may mean that his deposit for his next property which may mean he needs to borrow it and then pay more interest.
Is having a new car a bad thing? No. If you can afford it and if it is the highest priority option for you, go for it.
Does Greg want a newer car? Absolutely, but when the time is right and it's not going to effect his next investment opportunity so much.
But does these type of decisions effect what you might be able to do moving forward for residential property lending? Absolutely.
Want to chat about your options?
Give the My Mortgage team a call or drop us a message and we'd be happy to look through where things are at, where your options are and then make a plan with you.
Greg, Adam, Claire, Leon and the My Mortgage team.