The Disadvantages of Buying a Car

Buying a car is one of the biggest investments you may ever make; therefore, you should consider both the advantages and disadvantages. If you can get around conveniently without a car, it may be in your best interests to save the money you would've spent on a car and put it toward a mortgage, other investments or retirement. The appeal of car ownership may be enticing, since you can modify the car in any way you want and eventually make some money selling it, but generally, a car won't yield a return anywhere near what you paid for it.

Bad Credit

Monthly car payments can be very expensive, especially if you have poor credit. When buying a new car, you need to set aside money for a large down payment, and factor monthly payments into your budget. If you have other expensive bills or debt, a car payment will only add to your financial troubles--and if you're late on your car payments, this will only further hurt your credit.

Depreciation

Depreciation is the term for your car's decrease in value over time. Regardless of how well you maintain your car, it will inevitably depreciate starting the minute you drive it off the lot. If you don't plan on keeping your new car until you've paid it off, it makes more financial sense to opt for a used car.

Warranty Expiration

When your warranty expires, you are financially responsible for car repair expenses. These can quickly add up, especially your car is older or if you don't regularly maintain it.

Auto Insurance

If you own a car, you must be insured in order to protect yourself from expensive repairs due to accidents. While the cost of insurance varies depending on what type of coverage you have, you can expect to pay a few hundred dollars a year to insure your car--an expense you wouldn't need if you opted instead for other forms of transportation.

Used Car Quality

If you're considering a used car, exercise great caution before buying it. Hire a mechanic to do a vehicle inspection to make sure there are no serious problems. You can also expect to pay more for maintenance with a used car, though you may pay less for insurance.