A23-year-old reader wants to do the right thing with her money and not end up as a casualty of “bad debt”.
She has identified a flat she would be interested in buying for R600 000 and the upfront costs would be about R45 000. A better option would be to work out how much the property would cost her each month and start putting that amount away towards a deposit. The bank will see from that behaviour that she can afford the property and has the discipline to make those payments each month.
A car is a depreciating asset, so it devalues each year. In fact, depending on the length of the financing period, your car is worth less than you owe on it for the first few years, so banks limit the lending period to 72 months as the car is the security for the loan. If you finance the car over a longer period, you will find yourself in a situation where you will not be able to sell the car for enough to settle the loan amount. That is a risk for the bank and for you as the borrower.
mayaonmoney ...a good Single Malt is the answer....it will make you so clever you will see the answer clearly!
mayaonmoney If you can only remember that a car deprecaiates in value the moment you drive it out of the dealership but the apartment will gain value while rented out and someone paying your bond through rent. Then you can decide on a car while someone is paying your bond.