Personal Finance 101: You bought the car because it has HIGH resale value?

Personal Finance 101: You bought the car because it has HIGH resale value?

Someone told me some brands of car have a higher resale value. He mentioned that Japanese branded ones are better than the Continental brands. I think he is right. We just need to note that most buyers of these continental brands did not buy them for higher resale value. They bought those cars because when they drive it, they could feel it being more stable, maybe. They bought the cars simply because it has a premium image to it versus others which could have a reliability image instead. However… we should not be buying a car based on higher resale value.

Buy a car we need. If we need to show off, then buy some luxury brands to help us truly show off. If we need to just have a car to move from A to B, then buy the cheapest car possible. If we need a car for the whole family, then buy an MPV. Please buy based on actual needs. Buying the wrong car and having a higher resale value makes no financial and logical sense!

When we talk about GAINS, then percentage makes sense

If we have a super huge capital, then even a small gain in percentage could be a huge amount. However, chances are most of us do not have a super huge capital, thus, we need to maximize our investment returns and that is why we need to use percentage returns as the benchmark when we compare different investment choices.

If we have RM5 million, then a small return is still likely to be bigger than a huge percentage for a much smaller amount. If the amount is small, then percentage makes perfect sense.

If we are speaking about LOSSES, percentage is not the right measure yeah

You bought a car for RM120,000. After 5 years, you were able to sell the car for RM70,000. The loss is JUST 42 percent.

Meanwhile someone bought a car for RM60,000 and after 5 years, could only sell the car for RM25,000. This is a loss of 58 percent! Oh no…. such a HUGE loss in percentage.

In amount, that RM120,000 car had lost RM50,000. The RM60,000 car has lost RM35,000. Sorry yeah, I cannot agree about calculating the loss in percentage because the buyer of RM120,000 car actually lost an extra RM15,000. If the person had saved this RM15,000 instead… there could even be some returns too!

Buy the car you like, period.

If you love the car because it is a driver’s car, then please buy it. If you have no idea what is a driver’s car, that means you can just simply buy any car. You would not feel any difference anyway.

If you love the car because the external outlook matches your personality, then please buy it. If you love the car because it’s the brand which you love to be associated with, then please buy it. In fact if you are buying the car because of the strong aircon and also its safety features, then please buy it. These days, it does not make sense to buy any car with just 2 airbags yeah. At minimum 4 or higher. Else, that car should just be avoided at all costs.

Please do not buy that car because the sales person tells you that the car has HIGH resale value. When calculated, the resale price does not even cover the actual loss in amount!

Happy deciding.

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