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Driving Your Future

    You may be surprised to find out that you are driving your future to work every day. The sad truth is that for many Canadian’s they will lose more money financing the cars they drive to work than they will accumulate in their lifelong savings accounts.

    The price of the car is but one of the costs. The finance cost is another. When shopping for a new car often the driving factor is the monthly payment. As long as the payment fits in our monthly budget we roll merrily down the highway listening to tunes and enjoying that sweet aroma of new car smell.

    We are not saying you should not buy cars. What we are saying however is that you need to know the true cost of the car before you drive it off the lot. Everyone knows that the value of the car drops 20 to 30% as you leave the dealership but few have factored in the opportunity cost of driving a new car on their retirement.

    Let’s assume you bought a $30,000 car today and financed it at 6% over 60 months. The monthly payment would be $579.98 and you would end up paying $34,799 over the five year period with $4,799 in interest.
    Had you been able to pay cash for the car and invest the interest at 6% you would have earned $169,894 over a 40 year period assuming you purchased one car at $30,000 every 5 years. That is the opportunity cost on just one car over one’s lifetime. When you consider many of us have 2 or more the number is even larger.

    Give us a call and let’s sit down and see if there is an opportunity for you to buy the cars you want and keep the interest you may currently be giving away.