Thinking about purchasing a new set of wheels? Pump the brakes, advises personal finance expert and star of ABC's "Shark Tank" Kevin O'Leary. It could take a major toll on your finances.
"You're thinking about buying a car. Let me give you a new idea: Don't," O'Leary tells CNBC Make It.
"Cars cost a fortune in maintenance and insurance and just the amortization, which means as they go down in value, you're losing money," O'Leary explains. "Let's say I pay $25,000 for it. Two years later, it might be worth only 12 [thousand dollars]."
Don't lease one either, says O'Leary.
Take public transportation if you can or do what O'Leary did.
"When my lease came up just a year ago on a Mercedes Diesel, a beautiful SUV that was 2 years old and I'd hardly ever driven because I used so many shared ride services, the dealer called me up and said, 'Kevin, your lease is coming up. I've got a brand new car you're going to love,'" O'Leary recalls. "And I said 'I'm going to pass; I'm going to drive this puppy back to you, and wave goodbye to it.' And now, I don't own it anymore.
"I use my phone to call Uber or Lyft and they take me around the city. I save a fortune. I feel good about it," O'Leary says. "I hate cars."
O'Leary suggests others who need to drive do the same, even if you have a daily commute to work or school.
"Even if you use a car every day to get to work, it's still cheaper to use a shared ride service, because you can choose the level of luxury you want. You can share the ride with somebody else," O'Leary says, referring to services like UberPool and Lyft Line. "I know people that go miles for only eight bucks. They're taking advantage of a system that's actually democratizing the cost transportation. Why aren't you?"
While O'Leary has anecdotal evidence, a 2017 analysis from personal finance website Nerdwallet did the math on commuting daily. It found that in a number of places, Uber could actually be a cheaper option as opposed to driving your own vehicle: Out of 20 metro areas, Uber is the cheaper option in Chicago, Illiniois; Detroit, Michigan; Los Angeles, California; Miami, Florida; New York City; San Diego, California; Washington, D.C.; and San Francisco, California, which had the biggest savings at $83 a week. However in other urban areas, including Dallas, Texas and Phoenix, Arizona a personal vehicle remains more economical. Phoenix area commuters had the highest savings at $135 a week, according to Nerd Wallet.
Whatever the case, use your savings to start building wealth, says O'Leary.
"The whole idea is pay off your debts by not buying stuff you don't need," O'Leary emphasizes.
"You don't need a car. You're working in a city where you can either take the subway or basically use a shared service. Try both. But don't get stuck parking $25,000 into a car. I don't need it. Why should you?"
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Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."
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