5 Reasons You Should Buy A New Car
The M-Network is doing a group writing project this week on the topic of new cars, used cars, or no car. We would like to invite you to participate as well. Please include a trackback to this post in your article or include a link via a comment below and I’ll add you to the list at the bottom of this article.
I’ve been pretty vocal in my previous articles about how I am a huge proponent of buying used. We currently own two used cars. One is a 2001 Nissan Sentra we payed cash for and the other a 2004 Dodge Durango that we purchased in 2005. The Durango was a Dodge demo that we got for a steal due to being only 1 year old and having higher than normal miles.
Since I would suspect you’re tired of reading about my feelings on used cars, I thought I’d give you some reasons why you should buy new instead:
1. You don’t think car dealerships make enough money and you want to help them out
Sure, dealerships make money on used cars, but they make more selling new cars. Why? Dealerships get tons of hidden kickbacks and incentives from the auto manufacturers that you never see. Ever been to a dealership and purchased a car at invoice driving away thinking “Ha, I showed them…I am the negotiating King!“. Well, sorry to tell you, the dealership didn’t pay invoice for the car. In fact, chances are, if you purchased from a fairly large dealership they made a good $1000 on the car by selling it to you at invoice. Not to mention the fact that they made additional money by financing it for you.
When you buy used, they only make the difference between what they purchased the car for and what you paid for it. Many dealerships in fact sell pre-owned cars just to entice you into looking at their new cars.
Let’s face the facts, when you buy new you pay more money and the dealership makes more money.
2. You enjoy throwing money out out the window as you drive down the road in your new car
The average new car loses anywhere from 3-5% of it’s value as soon as you drive it off the lot. For a $30,000 that is $900 – $1,500 dollars. Over the course of the next 3 years, that same car will continue to plummet in value and lose on average 45% of it’s initial value. With this kind of depreciation, it’s the equivalent of throwing $12 a day out of your window as you drive that fancy new car around. Not including the interest you’re paying if you financed it.
I have a better option, buy a car that is 3 years old and well cared for and save that $12 a day instead. At the end of the year, you would have $4,380 not including interest.
3. That great new car smell really is worth 5-10k
I love the smell of a new car, especially one with leather interior. It’s probably one of my favorite smells, but let’s look at the facts. On average, purchasing a car that is 1 year old with low miles can save you $5,000 – $10,000.
We were actually look at Ford Expedition ELs this weekend. They had a really nice 2007 Eddie Bauer edition with only 4,000 miles on it for $37,000. The same model new (2008) was around $47,000. That’s a difference of $10,000. The pre-owned 2007 smelled new, looked new, and was significantly cheaper.
Be smart, let someone else take the initial hit. Oh, we didn’t buy it…it was just too much money.
4. You enjoy parking in the back of the lot sideways with orange cones surrounding your new vehicle
Every time I have ever purchased a new car, I spent the first 6-12 months driving the car on egg shells. I was paranoid about it getting dinged, scratched or even getting dirty. When I graduated from college in 1992, I purchased a brand new Mustang 5.0 liter. It was one sweet (and fast) car. But I was so incredibly paranoid about it, people actually didn’t enjoy riding in it with me it. I about drove my wife (then my finance) crazy.
Sure enough, it eventually got dinged, received a scratch or two and I accepted the fate that it was just a car. Honestly, when you spend that much money on something so new and shiny, your automatic reaction is protect it. It’s going to get dinged, scratched and even get dirty.
I now buy used and let someone else be paranoid about those first few dings and scratches. Less stress in life is a good thing.
5. You work hard and deserve a new car
Here is probably the biggest, and most childish reason to buy an expensive new car…”I work hard and I deserve one”. This is exactly how smart people justify a stupid decision in most cases. I do agree with this thought process though, but only if you add the following “and I can afford it”.
Cars are expensive, and in most cases a depreciating asset (i.e. not something anyone financial savoy person would recommend you put your money into). Unless you have some spare cash laying around, you need to be really smart about your car purchasing decisions and not fall into the emotional trap of buying one because you think you deserve one.
Here are links to other articles from both M-Network members and other bloggers participating:
- Moolanomy - My Cars and My Life
- Plonkee Money – About My Car
- I’ve Paid For This Twice Already… - My Evolution From the “New” to “Used”… Car, That Is
- Earning Our Freedom – New or Used: That Is The Question
- Cash Money Life – Save Time and Money By Trading in Your Car
- Budget of Destiny – New or Used What Kind of Car Do You Buy?
- Are You Going To Be This Way The Rest Of The Time I Know You – How Do They Sleep At Night?
- Being Frugal – My experience buying a used car with cash
- The Dough Roller – Service Beacon: A Free Online Tool to Track Your Car’s Maintenance Schedule and History
- My Two Dollars – All About Cars and Money
- DebtFREE-Revolution – New Car, Used Car, Leased Car, Bought Car
- Suburban Wife’s Daily Dollar Diary – In Defense of New Cars
I’d also like to invite you to take a peek at a car blog started by my 11 year old son. He’s so excited :-)
- 7 Reasons Why Borrowing From Your 401k is Bad, Bad, Bad!
- One of the Many Reasons I hate Credit Cards – Thanks for nothing Chase