Walking onto a dealership lot, and driving off in a brand new car - this is a common dream for most people, their entire lives. Right up there with home ownership, everyone dreams about the day they can afford to buy that new car! When you start to crunch the numbers, many smart budgeters start to ask the question "is buying a new car worth it?" Paying top dollar for a brand new vehicle is anything but a long term investment for your money, but there are some unique benefits to new car ownership that can't be replaced by a used vehicle. Let's take a look at some of the key benefits and drawbacks of purchasing a new set of wheels, and we'll let you be the judge of whether or not buying a brand new vehicle is the choice for you.
Let's get this one out of the way first. If you are someone who only likes to pay money when it represents future investment growth, buying a new car is not going to be for you. Unlike investing in home ownership, which will likely appreciate in value over the years, your new car decreases in value the second you drive it off the lot - and exponentially thereafter. The car then becomes "used", to a degree, even if you only put 100 miles on it. You could then still sell it for a very good price, but it would likely lose thousands in resale value. However, anyone can acknowledge there are many expenses in life that aren't an investment - like groceries, or clothes, or toothpaste. You don't walk into a deli and order a sandwich, and ask, "Hey, what's the resale value of this sandwich? I don't think it will sell for much next week, and I can get a used one for two dollars cheaper from my neighbor's fridgeâ€¦" The point is, you're buying the nice new expensive sandwich, so you can USE (eat) the sandwich - not so you can sell it to someone later. It's all about the value of using and enjoying it in real time, as a disposable expenditure for your own satisfaction. This is very much what you have to realize when you look at people who buy new cars. They're not buying them as investments, new cars are just the most expensive example of non-investment expenditures in our everyday lives.
Save Don't Slave
The other side of the coin in this equation is, if you aren't vain enough to buy into the myth of "what it means" in our country to drive a nice car, you can always save some money by buying used. If your only goal is to get from point A to point B successfully, you can really save thousands of dollars. There are cheap economy used vehicles that are 8-10 years old that still work, and probably will for 10 more years; often costing well under $10,000. This is the "Save Don't Slave" mentality that figures "why slave to pay high car payments, when you can save and still get the same literal value?" Even if you don't want to roll around in a complete "Junker," you can still get some really nice vehicles that are essential new (1-2 years old) and save thousands of dollars. This is the most common type of used car buying, as most people still buy into the "status symbol" of driving a nice car, and want to look good. However, even if you play the game, and our out to save some money - there are some unique benefits to new car ownership that simply can't be replacedâ€¦
Unique New Car Benefits
Aside from the hedonic joy of stepping into your brand new car, and getting that "new car smell", there are some literal benefits to driving a brand new car. First of all, if you're someone who really takes care of your vehicle - you know it's going to last a very long time; possibly decades. When you buy that new car, you know you're the only one to ever drive it outside of a test ride. This means you're protected against buying a "lemon", or a car that has unforeseen issues you never knew about. It's quite possible for example to see an extremely nice 3 year old SUV on a used car lot, with low miles and a great price. Bargain, right? Could be wrongâ€¦ For all you know that SUV was owned in Boulder, Colorado - where the owner ran it up steep, rough roads every weekend for three years - pounding on the transmission, suspension, and breaks. Because none of these systems are visible externally, you might not even know they're on the brink of destruction. With the warranty expired, you might find yourself owing five or ten thousand dollars in repair costs months after you buy the vehicle. Now, this example is extreme, but one thing is for sure: you will never have to worry about this scenario when you buy a new car. Not only are you the guaranteed first owner; but you'll also carry a warranty that protects you against any manufacturer deficiencies.
Other New Car Drawbacks
Other than the expensive sticker price, and instant depreciation - there are some other drawbacks financially to owning a new car. There are often "luxury" and "new vehicle" taxes put in place by many states, that charge you simply for the luxury of buying a new car. You'll also enjoy dealer add on fees like "destination charge" and "processing fee". Once you take the car home and register for license plates, you'll notice that many states charge up to 5 times more for registration fees. Most of these are non-existent when you buy a car that's even 1 year old. It's pretty easy to see that buying a new vehicle provides you with a whole catalog of costs that are easily avoided if you buy used.
The Choice is Yours
Only you have the unique value set that will define whether or not you will buy a new car. Do you care about the vanity of driving something shiny and new? Are you just too frugal to stand "wasting" thousands of dollars the second you drive off the lot? The fact is, most people land somewhere in the middle. Most people do care about driving a "nice" car, that isn’t more than 6 years old - and they're willing to pay extra for that privilege. At the same time, most people refuse to save as much as they could on a used car, because they won't drive a vehicle over 7 years old. So what do you say? Where do you come out on the debate about buying new cars? Whether you have a penchant for excess, or are obsessed with saving money - you can share with us. Don't worry, we won't tellâ€¦