5 Reasons You Should Buy A New Car

By glblguy

Ferrari Hood

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:

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 :-)

44 Responses (including trackbacks) to “5 Reasons You Should Buy A New Car”

  1. Mrs. Micah Says:

    My family has bought 2-year old cars for years and it always worked out for them. Still lots of driving left on it, but significantly cheaper.

  2. Pinyo Says:

    At first, I thought you made a mistake with the title, but this turned out to be a great post. I know how that treat it like a baby feeling with the new car — really psychotic.

  3. glblguy Says:

    @Mrs. Micah – Indeed, great way to save a lot of cash.

    @Pinyo- hehe, that’s how I get ya ;-)

  4. jake Says:

    My cars are babied for their entire life (whether bought used or new), not the first 6 – 12 month window. I expect it to get dirty. But scratched and dinged? Not likely. I always park at the back of the lot away from everyone else. If I come back and someone parked next to me I check for dings or scratches from their vehicle. If I find something I’ll make sure that person will regret it.

    My last vehicle I sold after I outgrew it in 2.5 years and it had neither a scratch or ding.

  5. Justin Says:

    Nah, I found out recently the depreciation thing is plain wrong on certain models of car. I was seeing two and three year old Camrys, Accords, Civics, Corollas running about the same price as brand new. Maybe a few hundred less.

  6. glblguy Says:

    There are exceptions, for example the Toyota Sienna Minivan, but for the most part, especially on American cars, depreciation is really high. In looking to sell our Durango and get something else, found it has depreciated almost 50%.

  7. Justin Says:

    Re: The Durango

    That’s what you get for going mopar! It’s short for more parts needed.

  8. glblguy Says:

    lol…not going to bite :-)

  9. plonkee Says:

    My absolute favourite is number 1. I can’t think of anyone I less want to give money to. Apart from De Beers.

  10. Kyle Says:

    Nicely done. I’ll buy one of those air freheners that smells like a new car instead. Although I have heard that they actually smell like toe cheese!

  11. glblguy Says:

    Hi Kyle, thanks! I’ve heard the same. There is a liquid scent you can get though that smells pretty dead on.

  12. Eric Says:

    Ouch! OK, I’m ready to consider used cars now! Seriously though, for my next car (which should be a long way off), I’ll be searching the used lots.

  13. glblguy Says:

    @Eric – Good choice!

  14. JohnW Says:

    Is this self-righteous rant really supposed to convince someone who LIKES factory warranties without having to fight with (mostly bogus) “certified” programs that turn out to cover nothing at all? How about the full percentage point (or more) APR savings for buying new? How about knowing exactly where the car’s been and keeping a full maintenance service log? How about people who like to ENJOY life more than they like to stress heavily about using every penny efficiently? (With an 800+ FICO, lest you try to profile me.) How about the fact that, if we weren’t buying new cars, you wouldn’t HAVE any used cars to buy??? *rolling eyes* You’re obviously entitled to your own opinion, but this is a really juvenille way to express it. Anyway, you’re probably best off to actually try opening your eyes to the opinions and methods of others rather than blindly criticizing them in sarastic propaganda… Just as a life tip for you.

  15. glblguy Says:

    Hi JohnW, thanks for dropping by and commenting. To each his own, I express my views and perspectives and don’t expect everyone to always agree.

    A few questions/comments 1) How often do you use your warrenty and how much money have you saved as a result? 2) I don’t suggests financing, I recommend paying cash. 3) I enjoy life and don’t scrimp on every penny, I just make financial decisions that grow my money, not deplete it. 4) If you weren’t buying new cars, and everyone bought used the market would adjust and I would most likely change my opinion.

    My eyes are open, and I do listen to opinions of others. Listening and agreeing are two different things.

    Thanks again for commenting, I enjoy reading others perspectives.

  16. Pinyo Says:

    @JohnW – aside from your rather aggressive stance, I thought you made many good points for buying new cars. But for you to state your opinion so strongly, and call other people’s opinion “self-righteous rant”, that’s like kettle calling the pot black.

    And please remember, people who blog or write editorials by default express their opinions. There is nothing propagandistic here. Thank you for stopping by.

  17. Ted Says:

    I agree with the used car philosophy but a lot of your reasons aren’t as clear cut as you make out. For example I recently had to buy/sell an SUV to get a minivan for my wife. The best dealer offer I got for my SUV in trade was 60% of retail. Then they would offer to sell me an older used car with more miles for the full retail value of the SUV (they had the same year and model on the lot). In a nutshell the best dealer deal I could get on a used car was to pay them about $5,000 to get a car of less value than the one I was trading. Bottom line: There is just as much depreciation on a used car if you buy from a dealer. Use vehicles over $10k are not easy to sell yourself either.

  18. glblguy Says:

    Ted – Good point, buying from a dealer is never the best option. I always advocate buying from a private seller. Not sure if I agree though on sales of used over $10,000. I’ve had great success in the past, but you have to make sure you are asking a fair price for them. The used car market is growing considerably, especially as new car prices continue to rise like they are.

  19. LC Says:

    I will have to respectfully disagree, at least in my experience. I would say that for some people, used cars may be the better choice, but so many people just automatically assume they can’t afford or don’t want a new car that they don’t even look.

    I knew the model of car that I was looking for, and looked at both used and new. I went to a certain dealership and first looked at their used car lot. I found a 2-year old model with 40,000 miles. I discussed it with the dealer and we discussed the price briefly. I went to the new lot OF THE SAME DEALERSHIP and looked at a brand new car with 00004 miles on it. The first price they quoted me was lower than the used car price, and it included a 3 year warranty. After some more negotiations, I was able to get the brand new car for $2000 less than the same car 2 years older.

    I would strongly encourage anyone looking for a vehicle to not rule out anything but to consider the costs and benefits of all options.

  20. glblguy Says:

    @LC – That seems a bit fishy to me. How could a used car with 40,000 miles on be the same price as a new car when they are the same? Take a look at Edmunds.com and do a comparison. Sounds like the dealership wanted to sell you a new car and did a good job convincing you it was a good option.

  21. LC Says:

    Well since the dealership had 2 separate sites for new and used, and they didn’t know that I was considering both, I don’t think the “convinced” me to go new. I was just emphasizing that even within the same company, there is a large disparity between new and used pricing.

    I did do a comparison before I bought the car and the used price they quoted was what was recommended on KBB. It just so happened with the rebates that were going on at the time, in addition to paying with cash, I was able to get the same deal on a new car.

    In fact, after I bought the car, I looked up the KBB private party value periodically, and it was more than what I paid for up to 6 months later.

    I don’t have anything against used cars, and if it makes financial sense, I’m all for it. I just think that so many people don’t even look at all their options and could be missing out on a possible good deal.

    I feel like I should add that I kept my previous car for 12 years and I plan on doing the same with this one, so it’s not that I’m a new car snob, just that I like to get the best product for the money I spend.

  22. Eddie Guerrero Picture Says:

    Hello…Man i just love your blog, keep the cool posts comin..holy Thursday

  23. glblguy Says:

    Thanks Eddie!

  24. LC Says:

    My family owns a car dealership and I’ll be honest, the first “reason” is total B.S. We make more money selling used vehicles most of the time rather than new… but belive whatever you want. I personally think it’s smarter to buy a new vehicle just because of the life of the warranty.

  25. glblguy Says:

    Hi LC. I actually got that information from a Dodge Dealership owner that I am friends with. I thought the same thing, but that isn’t what he told me. Maybe it varies based on the used car inventory or region?

    Help me understand how the warrenty makes it smarter? Most 1-2 year old cars and still under warrenty AND warranties can always be purchased later. Personally, I’m not sure I’m buying the warrenty argument. Cars today are so reliable, that I seldom use the warrenty.

    Thanks for jumping in an offering your perspective. I would sincerely like to hear your thoughts on the discrepancy of information we have between new and used.

  26. john Says:

    1)Dealers make wayyy more money on used than new. U really think 1000 is a lot when purchasing a 22k vehicle? That made me laugh.2) Car reports only know reported accidents and are not foolproof. 3) People that sell cars in 2-3 years, specially sports cars, drove the hell out of them. The newest bling is an atractant but not so high to sell a car before 5 years. 4)anyone who finances with a dealer is a fool who due to laziness and willful ignorance loses much more money.5) the top reason buy new is for reliability and safty, profiling new car buyers the way u did is ignorant and childish. Again, if not for new car buyers u wouldn’t have the used market. I understand the point was to try to pursuade people to see your viewpoint but the best u can do is present unbiased facts and let people decide for themselves. I personally bought my primary car new for the reasons I listed, with a very low percentage rate three year loan through my bank. Btw three year loans save u huge amounts of cash. I’m not saying don’t buy used. I think with the proper research u can get a great deal. Do the legwork and the math, decide what fits your needs the best and your wants secondary.

  27. Veronica Says:

    I don’t want to screw around with trying to by a decent used car from some knucklehead on Craigslist, having to wonder what the history is of a particular car – and no, I don’t think Carfax alone does the trick.