The (financial) mistakes we make...

I have learned another lesson - this time an expensive one. I share my experience here, in the hope that some one else may see it and learn from it before making the same mistake.

In short, what I learned is that borrowing money, even for a short time, is not worth it - even if you pay the full amount in less then a year. Also what I have learned is that it is better to wait until you have the full amount, and then buy cash.

Here is the details of my lesson:

In December 2005 I bought a second hand car for ZAR69000 (2000 VW Polo Classic). May payments until the end of August 2006 came to just over ZAR9600. The deposit I put down was ZAR30000 and I also bought a mechanical insurance option for another ZAR3500, included in the "borrowed" money (a second mistake within the bigger mistake).

At the end of August I had enough spare cash to pay off the outstanding debt, and the final quote came to ZAR43000 (rounded).

If we count everything together, you will see that the car's total price so far stands at ZAR69000 (initial price) + ZAR3500 (mechanical insurance) = ZAR72500.

What I have paid in actual fact is ZAR30000 (deposit) + ZAR43000 (final payment) + ZAR9600 (total monthly payments for 8 months) = ZAR82600.

In 8 short months I have "lost" ZAR10100.

Let that be a lesson to you all :)

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