Buy Your Car Now Before Inflation Threat Hits Big Time

If you're going to buy a new car, you'd better buy one before inflation makes a comeback.

Economists the world over are predicting that the threat of runaway inflation would cause Central Banks to start raising interest rates.

Yes, the world economy is not out of the woods just yet. Still, conventional economic thinking places inflation as a bigger threat to a double-dip recession.

So, once inflation figures start showing marked increases, you can bet that Central Banks would react - knee jerk or otherwise - by raising interest rates.

This means that if you've been thinking about buying a new car and waiting for the right moment for it. Well, this is it.

If you continue to wait, say, till the 2nd quarter of the year, you might have to contend with interest rates that are higher than the rates that are being offered early in the year.

Of course, you shouldn't rush to buy a car for the sake of buying one. If you are still keen on saving, then you should consider how much you'd save if you continue to maintain your old car in good running condition.

What's more, when interest rates do go up, you can expect the returns on your savings to go up again. You can't expect the same from a new car simply because cars are high-depreciating assets.

On the balance, if you think you need a good car and have the money to spare, don't wait too long looking for a suitable one. When the 2nd quarter of the year draws near, you'd be facing the likelihood of higher borrowing rates.

If you don't need a new car, the saving you put aside would yield better returns, and would prove useful come the next rainy days.

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Addendum: For more info on economist predictions on inflation rearing its ugly head again, see http://www.themalaysianinsider.com/index.php/business/49159-global-economy-headed-up-and-so-are-food-prices