Adjust accounts with your car

 

Adjust accounts with your car

 

Today most families have one or two cars and they are going to keep them, according to statistics, almost a fifth of their budget, move or not. Is it worth sustaining that expense?

Adjust accounts with your car 

Buying a car is usually the second most important investment after housing for most people and a steady source of fixed costs that weigh the budget regardless of whether the vehicle is used or not. The road tax, the insurance, the parking space and the annual maintenance (checks, ITV, replacement of bulbs, windshield wipers, etc.) are costs that you have even if the car is spent most days parked. And as a property, it is one of those that begin to lose value at the same time you sign the purchase, so it is not a product that serves as an investment. Hence, financial advisors label the car as an expensive luxury and ensure that if the owners write numbers of the impact it has on their finances, very few would own it. “There are studies that indicate that any car that is used less than 25 days a year less than 7,000 kilometers should not be had because it is more profitable to rent it” or use a taxi when there is an unexpected, says Josep Soler , president of EFPA Europe .

To calculate if one finds it profitable to have your own car or would make a good business by getting rid of it as soon as possible is not enough to think about the purchase price or if it is already paid or there are pending letters. The purists explain that in order to calculate the global expense involved, it is necessary to start from the premise that the useful life of the car is ten years, so the purchase price must be added to the insurance cost of those ten years, the taxes ( registration fees or VAT are only paid when purchased, but the IVTM, popularly known as circulation tax, is paid each year), the cost of fuel that will be consumed in that decade according to the kilometers that are expected to be made, an estimate of the expenditure on maintenance, tolls, parking, repair of breakdowns, cleaning and ITV that will be had in all that time … With these premises, various authors estimate that having an own utility costs between 5,000 and 7,000 euros per year. “If you print the numbers correctly, the car does not cost more than 90% of the owners, especially if you live in a large city where you have many transport options, taxis in the corners, carpool or car rental offers. that convert this fixed expense into a variable expense according to the use you make “, says the president of the Professional Association of Investment Advisers Financing and Judicial Experts (AIF), Jordi Paniello .

Image result for account car

But even if one simplifies the calculations, it is obvious what cost the car because it has been paid for a long time and only counts the annual fixed costs that it causes – the insurance, the road tax, the garage rental and the annual revision of the car. maintenance – and what you consume in fuel, it is easy to find more profitable options if you drive less than a thousand kilometers a month. In addition, explain those who advise on saving , if one has the car always available at the door ends up doing more kilometers and spending more fuel and parking than if you do not have it and have to ask for a taxi or rent it. Because the main reason to have your own car is comfort. “That does not bring account for money does not mean that there are no other reasons, such as comfort and service, that come into consideration to decide to have their own car, especially if you live outside the city,” the financial advisors acknowledge.

‘Carsharing’
Of course, there are also many urbanites who in recent years, and coinciding with the expansion of carsharing or car sharing in large cities, have disposed of their car precisely for convenience, arguing that the cost savings adds to the concerns. Because for those who make sporadic use of the car, the formula of carsharing or rent for hours that includes in the price the fuel, insurance, garage, cleaning and taxes, and does not require reservation or paperwork whenever you want use the vehicle, it is very comfortable. “With this system I only pay when I use the car, instead of paying 15,000 euros for one that was going to be in the garage more than 200 days a year, and I also do not worry about renting parking, or taking it to the workshop, or put gasoline, or pay the insurance … “, says Fernando, who after suffering a serious and expensive breakdown in his car decided to opt for carsharing instead of buying another.

Rental
There are other alternatives. For those who only use the car during the summer holidays or if they leave the city for a weekend, conventional rental can be more interesting, for days or weeks. In addition to avoiding the fixed costs of the car while it is not being used, its defenders argue the advantage of choosing the model that best suits the use that will be made each time. “If you go on a weekend with the family, you’re still interested in renting a seven-seat minivan; On the other hand, if you go on vacation with some friends, you can choose a car with a large trunk, and if you need the car for yourself, you may need a utility, “they say.

Renting
There is also the option of renting , a long-term rental that includes in the monthly fee the cost of insurance, repairs, payment of taxes and replacement vehicles in case of breakdown. For some people – for example, some self – employed – this alternative may be interesting from a fiscal point of view, and for others, the attraction is to adjust the car’s cost to a fixed fee, without surprises due to breakdowns, revisions, etc.

Leasing
For those who want a car at their disposal there is another alternative: leasing or leasing , which is a rental with the right to purchase. It is the equivalent of asking for a loan to buy the car but with greater tax advantages for some companies or self-employed.

Image result for account car

The annual cost of the car

-Case A
Person who is paying a new utility in installments (240 euros per month), who lives in a big city and only uses it for some weekend outings or holiday trips. It covers about 10,000 km with an average consumption of 5.5 liters of fuel per 100 km.

insurance
€ 700

Imp circulation
€ 137

Parking area
€ 1,200

Fuel
€ 770

Maintenance
€ 400

Rental cost
€ 400

Cost of purchase
€ 2,880

Annual expenditure
€ 6,087

 

-Case B
Person who already has the car paid, lives in a big city and only uses it for the weekend or vacation. About 10,000 km per year, with an approximate consumption of 9 liters per 100 km.

insurance
€ 600

Imp circulation
€ 65

Parking area
€ 1,200

Fuel
€ 1,260

Maintenance
€ 400

Rental cost
€ 400

Cost of purchase
€ 2,880

Annual expenditure
€ 3,525

 

-Case C
Person who uses car sharing ( carsharing ) twice a month (a reservation of 6 hours and another one of the whole day) and hires rental car when traveling for vacations (two weeks and two full weekends per year). With the rental car, with which he has to pay for fuel, he travels 4,000 kilometers, with a consumption of 6.5 liters per 100 km

insurance
€ 0

Imp circulation
€ 0

Parking area
€ 0

Fuel
€ 364

Maintenance
€ 0

Rental cost
€ 2,024

Cost of purchase
€ 2,880

Annual expenditure
€ 2,388

 

In Personal Finance for Dummies (CEAC), economics professor Vicente Hernández affirms that “if we were aware that having a car is a luxury, we would have fewer economic problems “. And it gives some recommendations to keep in mind when one is thinking about acquiring one:

Do not be tempted
When you go to the dealership looking for a car according to your budget it is easy to end up offering a superior model because it is in promotion and there is little difference in price . But before letting yourself be tempted by the offer it is worth remembering, says Hernández, that the better car will have more power, consume more fuel, its insurance will be more expensive and the maintenance more expensive.

Avoid the comfortable installments
“If the dealer’s dealer offers to pay the car in comfortable installments , get out,” says Hernandez. Ensures that if the car is financed in small installments means that it will be many years paying and paying interest. In your opinion, if you do not have enough money to buy a new car in cash you have to consider not buying it and looking for other transportation alternatives.

Used
Acquiring a second-hand car in cash is a better alternative, according to economists, than getting into debt to buy a new one. “It is necessary to avoid financing consumptions with a loan unless it is a commodity of first necessity”, they emphasize.

Compensate the expense
For those who, for work or personal reasons, the car is a necessity and have no choice but to buy it on credit, the advice is to reduce other expenses to compensate for the impact of car bills on the family budget.