Let’s face it; there’s nothing like driving off the lot in a brand new car! The new-car smell, the fit & finish inside feel luxurious, no strange noises, and everyone is noticing you and your new ride!
So, what are the 5 ‘best’ reasons to buy a new car?
5. I’ll impress my friends and strangers with a new car.
Have you ever seen a brand new Kia or Honda on the road and said to yourself, “Wow! Someday I hope to be as successful as that person!” Me either. So, unless you are buying a Ferrari, I probably won’t give your shiny new car a second look. And do you really care what some stranger you’ll never see again thinks? And if you want to impress your friend, buying them dinner or clearing the snow from their driveway will do a much better job!
4. I’m always going to have a car payment, so why not get a nice, new car?I haven’t had a car payment since 2008; and the last two cars I bought were fully loaded cars in good shape and still very nice inside. I’m not rich, nor did I have tens of thousands of dollars saved up; I paid under $4000 each; that’s only 8.5 car payments! There are lots of reliable, nice cars out there that you can save up for in a reasonable time frame.
3. I want to save money on gas, so I need a more fuel efficient car.
Yes, new cars tend to be more fuel efficient than a comparable old one. So, you could end up saving at the pump. But that is where the savings end. The average car payment in America is $471; will you be saving that much every month in fuel? Unless you trade in your Mac truck for a Honda Civic, I doubt it.
Maybe it’s not your savings, but you are trying to be more environmentally conscious with your MPG boost. Will you reduce greenhouse gasses enough to offset those created by manufacturing your new car (mining the metals, pumping the oil for the plastics, the heavy metals & toxic waste created because of the electronics)?
2. We are having a baby, so we need a safe car.
Really? When your 10 year old car rolled off the assembly line it surpassed all the safety requirements and whoever bought it then didn’t think it was unsafe. Has your car become un-safe over time? If you think so, have a qualified mechanic inspect it and replace aging components. It will be much less expensive than even 2 car payments!
1. I need a reliable car; old cars break down all the time.
Yes, old cars tend to have failures more often than new cars. Parts wear out and fail over time. But is it really that bad? Suppose you just had to replace the transmission at $2000. That is a LOT of money, I agree. But how often have you actually had your car break down and leave you stranded? And $2000 is only about 5 car payments, and is easily covered by your emergency fund. And a rental car is only about $20-30 a day while your car is in the shop. The key to a reliable car is not age, but keeping up with maintenance. Replacing parts before they fail and performing routine maintenance will keep your car running for many more years.
Now, it is possible that your car will need a very expensive repair (such as a transmission) and you are wondering if it is worth putting that much money back into your car. Here is a simple way to determine if it’s time to upgrade: If the value of the car as-is (in it’s broken state) plus the cost of repairs is more than the value of the car repaired, it’s time to replace it. Sell it for what you can get for it and buy a newer, used car, for cash.
So, why am I so against new cars and car payments?
- Cars are depreciable assets. They lose 10% the moment you pull out of the lot, and over 60% in 5 years. Let someone else take the big hit and buy a 2-5 year old car.
- $471/month. That equals almost $40,000 in 5 years if invested instead; Invest that for 5 years starting at age 20, and that’s $2.6 million at retirement!!! Investing it monthly for your entire working career results in $7.2 million! Is that new car smell really worth that much?
- Contentment. Yes, I like new stuff, new gadgets, cars, etc. But driving an older car can help teach you to be content with what you have and not worry about what the Jones’s think.
What reasons do you have to buy a new car? Or not buy one?
The first time I calculated how much I needed to have saved at retirement, my jaw about hit the floor! To maintain my current lifestyle I will need to be rich!
