Never Buy a New Car, Always Buy Used
A new car sure looks good, doesn't it? The shine, the comfort, the new car smell - it all makes for an intoxicating buying experience. Few things in life are as thrilling as getting behind the wheel of a brand new car. Dealerships make the deals even more appealing by offering low interest rates, cash back, loan payoff and other incentives.
Take a moment to look past the gloss, past those euphoric first months when you're in love with your new car and ask yourself this question: is it worth it? Sadly, it's not. You pay an exorbitantly high price for an item that loses value as soon as you take it home. Financially, it never makes sense to buy a new car. If you're looking for a vehicle at a practical bargain price, a used car is the only way to go. Below, you'll find helpful information detailing why a used car is the better choice.
New Cars Depreciate Quickly
Perhaps the most compelling reason to avoid purchasing a new car is the fact that it depreciates so quickly. According to Edmunds, cars lose 11% of their value as soon as they leave the lot and an additional 15-25% each year for the first five years. A car valued at nearly $30,000 at the time of purchase will only be worth a little over $12,000 at the end of five years. Who wants such an expensive depreciating asset?
Today's Cars Last Longer
Many people try to justify purchasing a new car by explaining that their current car is already nearing the 100,000 mile mark. That number is not a death sentence to today's cars. In fact, many models are made to last well into six-digit figures. The key to extending the life of a car is regular maintenance. Purchasing a high-mileage car can be an excellent bargain, but ask to see the service and maintenance records if they're available to ensure the car was well taken care of.
Multi-Car Households Can't Afford New Cars
According to the U.S. Department of Energy, since 1980, more than 50% of American households have owned two or more cars. In 2010, 20% of households owned three or more cars. Although few people have cash for a new car, many are able to save enough to purchase a good used car. Even if the used car is financed, it can be paid off more quickly or the payments will be much more reasonable.
Certified Pre-owned Vehicles Offer the Best of Both Worlds
Many dealerships now offer certified pre-owned vehicles at significant discounts over the latest models. Many of these cars will only be two or three years old, have low mileage and still have their warranties. They also look as good as new and have the new, updated features you may find appealing. If you don't want an older used car, but realize that buying a new car is financially impractical, certified pre-owned vehicles are a good compromise.
After buying a home, cars are the largest purchases people make. Don't compromise your financial security for a pretty ride with all the bells and whistles when it loses value immediately. Buy a used car, and put the money you saved into investments that are more worthwhile.
