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Differing views on car vs flat

Cape Town - If you're just starting your career and want to make a smart investment choice, should you opt to buy a car or rather put your pennies into a bond for your first property?

Fin24 pondered the question of car versus flat in a recent article, and asked users for their input.

Fin24 user Ofentse Ramorula speaks with the voice of experience. He writes:

"Drawing from my own experience (having graduated and started my first job ten years ago), my advice would be buy a car first and don't even save a deposit for it.

"This is because the amount of money you save per month will more or else be equal to the annual average increase in car prices due to inflation in a year's time and you will be back to square one; by buying the car outright you actually save money because you have insured yourself against inflation. This is true since your annual salary increases will be outpaced by annual car price increases.

"You will also probably not stay too long at your first job, so buying an apartment close to the place of work doesn't make much sense, since it will generally take about five years for the house/apartment to be economically viable to sell and recover your costs or make a decent profit.

"This is because estate agents generally want around 6% of the purchase price as commission. Plus you will probably have to pay in about 20% of the purchase price as deposit, money that you don't have yet.

"So in summary, buy a subcompact car such as a Polo/Fiesta/Corsa, pay it off, and then save money for a house deposit. You will have enough deposit to pay in once you are in your third job, and now earning enough money to settle for a while at one employer.

"I currently have three properties, and have changed car three times in the last 10 years. I am advising based on the mistakes I have made and what I think would have been the right strategy to follow."

Fin24 user fqhamisa offers the following advice: "For me, I would buy a car first and pay it off in less than 5 years because it's cheaper to rent. After paying off the car, then buy a house or apartment as you call it."

Koketso says he would also buy a car as he is not a fan of public transport, and taxis have many inconveniences: drivers will only drop you off at a particular point for extra cash, and frequent stops make punctuality impossible.

"Sometimes taxis are stressful to travel with, one has to tolerate things that they are not in the mood for: loud music, bad driving and rude people. In my own car, I will have peace of mind, play my own music, move from one point to the other conveniently," says Koketso.

But other Fin24 users hold a different view. Xolani Zonke says: "The best would be to buy a property as early as possible, because if you start working at the age of 21, by the time you are 40 years old your bond would be paid up."

Primrose Mathabatha agrees: "In my case I would consider buying a property, even if it's small like a 1 bedroom flat/apartment. A property price doesn't depreciate and it's a good investment option."

Alexander Finlayson feels that owning a property is a good investment, and more important than having a car. "Yes, a car helps us get around but a house shows stability and maturity. People with their own apartment are respected more than those with a car," says Finlayson.

ADD YOUR VOICE: Tell us what you think and you could get published.

Disclaimer: All articles and letters published on Fin24 have been independently written by members of the Fin24 community. The views of users published on Fin24 are therefore their own and do not necessarily represent those of Fin24.


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