House or car – What should I buy first? This is quite a question given you need both, have money, but still not able to decide which one to go for first! Most of the people would advise you to go for a house because it is an appreciating asset while a car is deprecating liability. If you consider the long-term scenario, it might be true, but most of us need both of them, so the issue is not of long-term investment – the problem is which one to purchase first? Before you jump to any conclusions, give some time to the following:
1. What is your financial condition?
You need money for both but the amount of money required for a house is way more than what is required for a car. So, choose only what you can afford currently, keeping in mind the monthly payments for both.
2. What do you need more?
So, you have enough money and can manage the down payments, but what is it that you need more – house or car? A house is by all means a long-term investment while a car is just a machine; in case of any fault, you will have hard time coping up.
3. Do you live in a rental property?
If the answer is yes, then perhaps you should go for a house first. You can equate and calculate your monthly rentals and down payment on a new house and with a little patience you will see that buying a new house is a better option.
4. How long will your current car last?
You can get an idea of your car’s life expectancy from a decent mechanic. And, also have an idea about repairs that could boost its life expectancy. Also bear in mind that the repairs must be worth the money based on your car’s overall worth.
5. How will your overall expenses be affected after you purchase a house?
What we mean is which living arrangement makes it easier and quicker for you to save cash – the one before buying a house or the one after? Is the total cost of your current rent and utilities cheaper or higher than your calculated mortgages, utilities, taxes, and insurance?
6. How much time will you need to save money for a car?
In case you buy a house first, how much time will you need to save enough for a car, bearing in mind your monthly expenditures of mortgages, homeowner’s taxes and insurance?
7. How much time will you need to save money for a house?
If you go for a car first, how much can you afford to save comfortably each month for a house?
8. Keep an eye on the real estate market.
Is there any foreseen disadvantage to hold off your house purchase to another year? What are the current real estate market trends?
9. Keep an eye on automobile market.
Is the market sinking or rising? Can you postpone the purchase?
10. What is a smarter move?
You buy a house first but in the meantime your current car breaks down? Now you will have to finance a new car as well as pay monthly mortgages on your new house.
So, the bottom line is to consider all these factors before making a decision since every individual has different priorities. Best wishes for your purchase!