Why you should never rent a car
If you’re in the market for a new car, don’t even think about renting one.
That’s according to financial expert and bestselling author of “Women and money“Suze Orman.
“I personally think you should never, ever rent a car, do you hear me?” it tells CNBC Make It.
This is because when you rent you are paying money every month with nothing to show at the end of the day. “If you rent a car, you’re going to rent it year after year,” Orman says.
If you don’t have the cash to buy a car, Orman says it’s entirely possible to finance one, but make sure you don’t need to make payments for more than three years. If you have to finance it longer than that, then “you can’t afford the car you’re going to buy.”
Orman also suggests buying used, because unlike a house, a car will never increase in value. “The second you drive that car out of the parking lot, it depreciates 10%, 20%,” she says. “Let someone else get this depreciation.”
While owning a car isn’t negotiable for many people, the vehicle itself doesn’t have to be flashy or expensive. It is a utility that should be driven as long as it remains safe and reliable. In fact, Orman herself chooses to keep her cars for 12 years or more. It’s also smarter to go for a model that you can afford than a model that looks awesome.
“One of the best ways to build financial security is to spend as little money as possible on a car that meets your needs,” Orman written in a blog post in 2017. “Forget the bells and whistles you want. Paying less helps you pay for the car faster.”
Bottom line: It’s not worth forking out thousands of dollars on renting a car that you won’t own in the end, or trying to finance a fancy model just to keep up with the Joneses. It makes more sense to prioritize other financial goals, like saving for retirement or buying a home.
“Do you want to spend money that you don’t need to impress people you don’t even know and therefore love when you drive to a stop sign, they can admire you when you can’t even afford the car you’re driving? ” said Orman. “Don’t do this to yourself.”
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