What Should You Buy First – Car or House?
Most people can’t make large purchases at the same time, they can only buy one and put off the other. So what should an average-income family or individual buy first – car or house?
Buy a Car First
If you do not have a car, it’s more practical to buy a car first to allow you more mobility to and from work and to take the family (if you have any) to occasional weekend trips. We assume that if you are a young professional or a new hire, you do not have the need for a large house, especially if you’re not married yet. However, work and business often requires you to be on the road most often.
Nevertheless, if the city is like that of New York where it’s more preferable to commute than to drive, one can actually forego buying a car and instead invest in a real estate property somewhere. That property may not have to be in the city and the owner may not have to live there. It can work as an investment by having it rented or leased, while he or she rents a studio or apartment in the city close to work.
Buy a House First
If you have a functional car, despite not being trendy and eye-catching, then it’s more financially sound to buy a house first. People usually own a car even before a house, as a graduation gift or first salary purchase. When they start dating and get married, it’s likely that the couple have at least one working vehicle they can use for the family.
Truth be told, amidst all the taxes and costs of owning a real property, it’s still increases in value over time as compared with a vehicle that loses much of its value the moment it rolls down the dealership plank.
We recommend newly married couples planning to have kids to get a decent house. If there’s only one car, one partner can commute while the other can use the car for work and family errands. When it’s about time to replace the old car, the appreciating value of the house (bought first) can then offset the monthly mortgage on the car (bought second).