Should I buy a car or apartment?

[strongmom]

@32983 I can’t even justify a R400k car and I earn more than double your dual income, it just feels like a lot to throw into a depreciation asset. If you really hate the car I’m sure you can find a much cheaper one that is still safe and durable enough for a growing family, and then just save the difference for your house deposit, it’ll also mean you could qualify for a larger bond when they do the affordability check.

 

[sourabhsj]

@32983 It's an R8k payment. 62k gross, likely translates to 46-50k net before med aid. Spend is R30k, so that leaves you with R15+k to play with.

You can definitely afford it. Only question is whether it is the right financial decision?

The biggest flaw we have as humans is we look at the limits of what we can afford, if you earned double you'd double the budget even though you would accept a R400k one now. Same goes for if you earned half you'd probably be looking at cars in the R150k - R200k range.

The real question when it comes to purchases is being honest with yourself on the least amount you would find acceptable, especially when you're using debt to make the purchase.

Is a Starlet, Yaris, used Corolla for ~ R200k unacceptable? That way you already have R200k you can allocate towards the property.

 

[junebirch4]

@32983 If you have disposable income of 30K then do both. The property is an asset so make that the priority and you have to have a deposit so sell the car and put the cash aside for saving towards that. Get 100% finance on the car instead of 75% because in the long run the only real additional cost will be the extra interest you pay on the 25%. Get on the property ladder asap and you should make that back and more in the long run.

 

[jrm62]

@junebirch4 They don’t have a disposable income of 30k. Their fixed expenditure currently totals 30k which leaves about 20k on the table after tax (Assuming they both earn about the same).

Whether getting on the property ladder is a good idea or not depends entirely on the location and property itself. With current interest rates so high buying property is perhaps not the best idea. Considering that prices haven’t really dropped in the Durbanville area they will be paying a lot in interest on that 3bed flat.

OP if I were you I would save as much as possible for now and maybe wait for interest rates to cool down. Then you have a decent deposit and maybe some left over money for renovations (lots of old flats in Durbanville that sorely need a refresh).

Re the car, if it’s important to you then get it. However, I know a multi millionaire who still drives his old Fiat Uno and it gets the job done.

 

[sharrylee]

@jrm62 Multimillionaire in a fiat uno? Mmm

 

[stinna]

@sharrylee “You are not your job, you're not how much money you have in the bank. You are not the car you drive. You're not the contents of your wallet. You are not your fucking khakis. You are all singing, all dancing crap of the world.”

― Chuck Palahniuk, Fight Club

 

[sharrylee]

@stinna I'm not making a point that you should show off, I'm just finding it hard to believe a millionaire driving an uno, thats all.

 

[stinna]

@sharrylee lol why is it hard to believe? in today's currency a million net worth is actually not much at all.

i mean i know people who own flats ( worth > 1 million) who do not even own cars.

 

[sharrylee]

@stinna Because unos are fairly unsafe? I can believe a cheap car, but a bit safer than uno?

 

[zookajoe]

@sharrylee I know a lady who is a multimillionaire who drives a Toyota Taz. I’ve told her it’s unsafe and stupid, she just said that cars don’t increase in value so they aren’t an investment why should she waste money on it. Some people are weird man, even illogical if you ask me, but they exist somehow.

 

[navyvet47]

@stinna Hate these posts that say i know this person or that person. Talk from your own experience.

 

[32983]

Thanks for all the feedback. Just had a smoke so I don't understand much atm.

Overall it seems it comes down to either the property, cheap car, or neither and investing it. I will probably go cheap car. I just absolutely hate this car and want to see it burn.

But largely depends also on the interest rate I am offered. I applied with ABSA, Wesbank, and Investec (pray for prime minus 1)

 

[resjudicata]

@32983 You may hate the car but that's the Problem, its an emotional response.

A car is a tool. No more no less.

Buy the home. Save an extra R2500 a month and keep the shit box serviced it'll last until you can afford to get an EV.

Once you cover your roof with stealth Solar battery power and the savings from getting paid by the CITY of Cape Town to supply them excess, then your home is the investment and when you add the EV which can use the house and the house can use the EV battery, you win with fullel costs and never being without power.

 

[zookajoe]

@32983 You won’t get Prime minus 1 at any of those banks. I bought a few homes recently, Investec is the only bank where you’ll get that but I don’t know if they’ll let you bank with them. Maybe try to find out if you can bank with them. They give prime -1 for first time buyers always.

Also, I’m not gonna preach or anything, but if you are starting to think like a grown up about kids, buying a house, and getting better cars for you and your wife, then your conduct has to follow. Successful people don’t get high. The only ones who do work on wall street, and they all fall very far. Just a suggestion because I want you to start making 200k per month, but don’t take it as preaching.

 

[40mikemike]

@32983 Do you spend more time in your apartment or your car? Rather get a nice apartment then just get something that'll get you from a to b. Only get a nice car when you don't know what else to do with the money, or you need it (like a family SUV or a pickup if you're moving stuff around a lot).

 

[32983]

@40mikemike We are planning that this becomes the family car. Kids in like 4-5 years.

In my head it gives me time to save for the apartment and wait for rates and property prices to go down.

 

[40mikemike]

@32983 4 to 5 years is a long time and there's no guarantee you'll even have kids, beside, once you have them you'll only need an SUV when they're older. Let's assume they're 5 when you really need it. That's 10 years till you need the Corolla Cross + 5 years of usage. Are you really going to get 15 years out of your car? There's much cheaper options which will last you till you need an SUV, then you can get what suits your needs then, when you're (hopefully) in a better position to afford one.

 

[cerulean123]

@32983 Property prices are unlikely to go down. I would buy the property. Get the car valet cleaned and serviced and hope it lasts for 18 months more.

 

[specialguest]

@32983 Def get the apartment or house. It’s the greatest investment available. You’re buying a large asset that WILL grow in value and the cost of owning it (the bond) stays pretty constant. And in a few years you can rent it out and buy your next property (by then you’ll have a much bigger salary). The car on the other hand costs way more per month plus insurance. And it loses value with every km you drive.

 

[lovebug3]

@32983 Cheapest car to own is a paid up car. Drive the shitbox. It's still cheaper than a new car.