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A couple of my friends are planning on buying a car, and asked me to take part, so every one will own 1/3 of it. Here are some facts about me:

  • The inflation rate in my country (Iran) is high.
  • It's not long since I started to make money, so basically by buying a car, I will have very little saving.
  • If I don't buy car, I will invest the money on a business or activity.

So what are your thoughts on this matter?

  • Aren't interest rates on deposits also quite high? I see some articles mentioning 15% for 1-year deposits, is that consistent with what you've seen at your banks? – Hart CO Aug 9 '18 at 4:26
  • It's unfortunately true, but I prefer not to invest money in banks for ethical reasons. Such as the fact that I can use this money to help a business or a person, something banks don't do apparently. – Hessam Shekhasnay Aug 9 '18 at 4:28
  • @HessamShekhasnay if a bank is giving you 15% interest then they are loaning money to people and businesses at more than 15%. – mhoran_psprep Aug 9 '18 at 10:13
  • This is the problem @mhoran_psprep. 15% is a high interest rate that many loaners would find difficult to pay, also banks (at least in Iran) don't share the business risk with loaners. So if the loaner accidentally loses his wealth or business, banks want their money no matter what. They are basically loan sharks in disguise. – Hessam Shekhasnay Aug 9 '18 at 11:04
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    Sounds like a sure way to ruin the friendship. What happens when one of you breaks the car? What when two of you need it at the same time. Hope you figured everything out in writing – Daniel Aug 9 '18 at 14:08
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A high inflation rate suggests that you are better off buying a car today rather than waiting for tomorrow, when it will be more expensive.

That said, the biggest question would seem to be if you need a car. If you would not buy a car on your own until you were much richer relative to the price of a car, then you don't seem to need a car.

Is there some reason why you might need a car in a year or two? If inflation outstrips investment returns, you might be better off buying a car at current prices rather than waiting.

You might consider if you would get a fiscal advantage from the car. Will it make your travel easier? Could you use the car in a business? In the United States, there are things like pizza delivery and ride sharing where you can get paid to drive a car. I'm not sure what is possible in Iran.

Will you be able to sell the car in the future? For how much? You can use past performance as a guide to this question.

The other thing to consider is what benefit the business or activity would provide you. That can help you compare to the benefits of having the car.

  • The car WILL be used, since I can get to my working place a lot faster. But I heard before, that it's better to invest money instead of spending it on things such as car, TV and so on. Is it necessarily true? – Hessam Shekhasnay Aug 9 '18 at 4:04
  • "Better" is relative. If you invest your money, you (might) get more money. Money is only useful if you actually spend it on something, so the question is, will having a car increase your quality of life more than whatever else you would spend investment earnings on? – chepner Aug 9 '18 at 14:03
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Since interest rates on deposits are comparable to or higher than inflation rates, then inflation alone doesn't seem like a compelling reason to buy a car. You'll have to weigh opportunity cost (what you could have earned on your money if not spent on a car) against how much benefit you'll get (and cost you'll incur) from owning a car. Typically cars are just expenses, they lose value, break down, and get in accidents. Add to this your low savings and the potential headaches associated with owning a fraction of a car and it could easily be more trouble and cost than it's worth.

If you are getting by without a car relatively easily, then you'll likely get further ahead by investing than by owning a car. If owning a car would be a huge quality of life enhancement or open up potential for greater earnings, then it might be easier to justify the expenses of car ownership.

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High inflation rates results in increased car prices.So you have to spent more on the purchase of car.Also you are going to jointly purchase the car.Once purchased you have to spent on fuel and service maintenance etc.Your expense will increase.You can compare this amount with the expense used for commuting to your workplace by other means.Whichever is less will be advantageous for you.

If you are interested in business or other activity well plan it.Check if you get adequate returns from those areas.

One more option is try leasing a car jointly.The depreciation cost will not end up on you.Work out the cost with your dealer and make a wise decision.

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Depends on the Car you are buying, if the inflation is High, and the Car is a model that is imported to the country, then the price will go high because it's been imported with a foreign currency like Dollar, so if the exchange ratio changes (as it will for sure in high inflation) then the car's price will go higher (although it isn't an investment, it's actually a decrease in the value of the money). but if the car is a one built inside the country and most of the parts are made by the country itself, the prices will not increase as high as a foreign car. and of course I would never buy a car just hoping to see its price go high, I would find better sources for investment.

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