Real estate and vehicles are good assets to have in life and for diversifying a financial portfolio. However, they are both major purchases that take some consideration in terms of what works best for your lifestyle and your priorities. It’s preferable to have both, but you can’t always make these purchases at the same time (and it may not even be advisable to attempt to do so).
So, how can one decide whether to buy a home or a car first? We break it down here.
The Pros of Buying a Home
This can be a valuable asset for you that nixes the need for renting and contains various necessary factors that make it less of a liability. Financially, it can be a good thing for your credit score in the long run if you are able to pay on time and eventually complete your mortgage loan application.
Buying a home also helps you set down some roots that can really ground you with a base where you can execute your long-term plans, whether it’s starting up a business in the area or raising a family, or even both. The market now may still have a room for you, as there is still a 65% housing ownership rate in America.
The Cons of Buying a Home
A lot of the expenses that come with homeownership crop up after the purchase, with extra dues, insurance, maintenance, utilities, and any possible renovations. If you aren’t in a place in your life that can prioritize housing amidst your responsibilities and opportunities alike, then it may only prove to be a detriment to you.
If you aren’t looking to settle down in one place quite yet, this could be a poor investment that only ties you down for years to come. And, if that happens, you can’t always fall back on just reselling as property value fluctuates.
The Pros of Buying a Car
If you have a tough commute, then buying a car seems like the most solid option to get around using an asset that is already yours. Right off the bat, it’s also clear that this would be an arguably smaller financial investment that would take less upkeep. It’s easier to acquire ownership of a car, whether you get one brand new or purchase a used model.
Plus, it takes away the hassles of having to find public transportation in time. Hence, 89% of surveyed consumers prefer to have their own car as opposed to ridesharing. This can also be a means of income if you have a mobile business.
The Cons of Buying a Car
Naturally, a car also has maintenance and repair costs on top of constantly needing fuel and insurance. The cost will also depend on what type of model you choose, because if you get a clunker that gets issues often, you may essentially have a machine that is bleeding cash. As an asset, it is also considered a depreciating one that doesn’t increase in value over time because newer models outdo it in the market as the years pass.
Even if you opt for a luxury model (which is not necessarily the best investment either) that is considered highly collectible, it also often depreciates over time.
It all comes down to priorities and investment outlook. A house may be a better investment to start with, though it would require you to have a steady stream of income to keep up with its payments. A car, while a bit shakier as an investment, has a lot of practical use, especially if you’re not tied down.