Today on the Finance Flash Go! podcast, let’s chat about cars for doctors, otherwise known as the “doctor car”.
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Everyone knows about the doctor car. Doctors know about it. Non-doctors know about it. Other than the doctor house, it is the symbol of medicinal consumerism.
But is it smart to get a doctor car? If not, what kind of car? Should you buy or lease a car?
Well, take me as an example as I try to illustrate this.
Before I began my financial education at the end of my fellowship, I was prepared to lease a doctor car. I budgeted $600-700/month for my car’s lease.
Sounds great in theory, but…
But,
- My student loans totaled over $450,000
- I had not even made my first attending paycheck
- I had credit card debt
- My financial plan was non-existent
Hmm, maybe this $7200-8400/year could be better allocated to increasing my net worth by decreasing my debt instead of buying a depreciating liability?
Oh yeah, that’s the other thing. A car decreases in value the moment you drive off the lot. It’s not an asset. It’s a liability.
And leasing a car, you basically are subsidizing the depreciation of the car for the dealership.
So, my advice to to buy your car outright. If you can’t pay the car off in one year, you can’t afford it!
Now, I bet you’ll ask – do I have a doctor car?
The answer: nope.
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But….if you have your own PC, and an associated PC-Employment Lite structure, your PC can lease the car for you, and your PC will take it as a business expense. The net effect is your car transportation doesn’t cost your household anything. You get to drive a nice new car of your choice at your business’s expense. Smart PC-based fringe benefit plans like this, along with with other tax advantage programs through your own PC make a PC-Employment lite structure the best choice for doctors.
That is an awesome advantage!!