Is There A Car Ownership Ladder?

    Posted by Ben Davidson about 2 months ago

    You’ve probably heard of the property ladder. Indeed, since the economic situation puts Millennials in difficulty when it comes to homeownership, more and more institutions are considering revisiting the infamous property ladder principle. Indeed, the idea is that you begin your journey as a homeowner with a small house, and through capital growth and smart selling processes, you gradually upsize your home. This is referred to as climbing the ladder. Finally, the goal, the last step on the ladder, is your dream home — aka an expensive and high maintenance house compared to your first home. The main question that Millenials and young drivers ask nowadays is whether the principles of the property ladder apply to car ownership. Indeed, cars just as like houses are a status symbol, and consequently, it is fair to say that they act as a reflection of your personality, wealth and interests. Is it realistic to think of your journey through car ownership as a ladder to climb to get to the vehicle of your dreams finally? There is more and more evidence that the car ladder is a thing and should be part of your long-term budgeting and planning strategy. In other words, you won’t get that supercar tomorrow. But with the right approach, you might be able to buy it one day.


    Is working hard enough?

    Even though some drivers are quick to admit that the car is only a tool to get from a point to another, it’s impossible not to have feelings when you think about cars. That’s precisely why designs, models and features are so varied: Everyone has a dream car, a car that represents everything you want your vehicle to be about. However, if you’re a new driver, you might see the complexity in getting the car you want. Indeed, young adults nowadays have become aware of the changing financial situation in which mortgages are increasingly more difficult to repay, and minimalism serves as a budget backup plan. In short, the car of your dreams comes at a price, and while you can set a budget to save towards it, your journey through life is likely to take you to other places. You might need to use your savings for an emergency bill or to finance medical costs. Of course, you can work hard to make it happen, but, let’s be honest: With increasing costs, working hard isn’t always enough to make your dream come true. You need to climb the car ownership ladder, one step at a time.



    Most car buyers look for financing options

    As a result of the increasing financial instability, more and more drivers are reluctant to take a gamble and invest a large sum in a vehicle. Indeed, when the majority of American households have less than $1000 savings, it is essential to look for alternatives to climb the car ladder without going broke. As a result, numerous dealers offer financing options, such as a Buy Here Pay Here Auto Dealer that guarantees low down payments to its users. However, financing your next vehicle comes at a risk. For instance, young drivers are judged immature and are not always taken seriously by financing providers. Indeed, when you are young and lacking a credit history, lenders can struggle to trust you. Additionally, your termination rights might be an obstacle if you’re trying to end your contract early. As a conclusion, car financing options are an excellent upsizing strategy for experienced drivers who have an existing credit score. The higher your credit score, the easier it gets to find a lender to advantages conditions. Poor credit score drivers have only a limited choice of options.



    Young drivers can only afford cheap vehicles

    Due to the lack of financial information, young drivers often need to buy their first car using their savings. The choice of the first vehicle is dictated by your financial wealth. It’s a matter of how much you can afford to spend on the car and the insurance cover. Small cars are an excellent choice to get onto the automobile ownership ladder. The Fiat 500 and the Volkswagen up! are both small city vehicles that are also cheap to insure. Additionally, they also share high levels of fuel efficiency, which is an advantage for students and low wages. More often than not, parents help to finance the first vehicle or buy it at their cost. However, very few young adults can stay on their parents’ car cover.



    What’s the right attitude to the car ownership ladder?

    Ultimately, the best approach to the car ownership ladder is to keep your eyes set on your ultimate goal, your dream car. Any vehicle before that is only a step on the ladder. If you manage to think in terms of investments and profits, instead of developing an emotional bond with your vehicle, you can learn how to make a profit out of your cheap car when you re-sell it. Affordable cars are likely to appear in local car auctions, on eBay or even on the community boards of a local shop. Indeed, with a little bit of love and cleaning, an old vehicle can be made fit for purpose. Ultimately, you need a checklist to make sure that the vehicle is safe and works – more on this later on. But a private seller could get rid of a tired car at a low price, while you could re-sell it for 10 times the amount if you look after it. To make a parallel with the property ladder, this is almost the equivalent of house flipping.


    What to look in for your first car

    When buying second-hand vehicles for cheap, you naturally need to stick to a safety checklist to ensure that you are not being conned into committing to the purchase of a damaged or dangerous car. You need to check for essential features. Your cheap car should have a functioning ABS, which prevents the wheels from stopping during hard breaking. The ESC is a must as it stops the vehicle from rotating when you take a curve too fast. You also want airbag systems that can protect you in the case of an impact. Recent models might come with a backup camera and a collision warning. However, these are not critical; they only give a boost of confidence, which can potentially backfire on young drivers. Additionally, you should also take the car for a test drive and ensure that it handles properly on the road. Test for instance whether the car stays on the same course when you let go of the wheel – for a small instant. You should also check under the bonnet and the car and ensure that the engine and the structure don’t have any sign of rust. Make sure to perform these tests for each second-hand vehicles.



    Gradually add more as you can afford more

    With time and through the careful process of selling a car to buy or partially finance another – bear in mind that you will not always be able to make huge profits – you will be able to climb the car ownership ladder. Think of each car as a step closer to your dream vehicle. Consequently, you want to be in a position to upscale your vehicle mindfully. For instance, for young couples, it’s likely that the next step to consider is to buy a family vehicle, but don’t think of it as a step-down. With your goal in mind, you can adjust your strategy to tackle life changes as they come. For professionals on the go, for example, you can consider a technological investment. Indeed, new vehicle could embrace Bluetooth connectivity, vehicle-to-vehicle communication, and WiFi connectivity. Once again, don’t rush through the ladder. One step at a time, focusing on the most meaningful automotive investment for your situation.



    Should your dream car be a luxury car?

    You might even come to rethink your expectations when it comes to your dream car. Indeed, according to The Millionaire Next Door, millionaires spend on average $34,000 for their cars. Indeed, millionaires under the problem of lost opportunity cost, which is to say that the more you spend on your vehicle, the less you have for other projects. Additionally, luxury cars can lose their value rapidly and incur high maintenance costs. The question is: Is it worth the troubles?


    Downsizing with age?

    Finally, as drivers get older, they tend to downsize their cars. Indeed, seniors can struggle to drive a big vehicle that can be difficult to maneuver at an age when eyesight and mobility issues are a reality. While this doesn’t mean you can’t have a dream car, you should also be aware of how your driving abilities could deteriorate with age. A luxury, fast car may not be suitable anymore.



    Very similar to the property ladder, the car ownership ladder takes drivers through a path of financial learning. While the path might be long, it is fair to remember that each step on the ladder can be influenced by a variety of factors, so that your car ownership journey is tailored to your situation, age, and requirements.


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