To some people, buying a brand-new car might seem like the optimal option. The benefits are clear. You’re getting a car at its newest. You rarely have to worry about any damage being done to it in the past. To some people, it’s worth spending more for that. It’s time to challenge that logic. Let’s look at the reasons why you should, in fact, rarely if even buy a brand-new car.
You take all the brunt of depreciation
When it comes to making the best move for your finances, you want to consider the vehicle as an investment. Rarely, if ever, can you cause a car’s value to go up. All you can do is slow its depreciation as much as possible. However, the lion’s share of that depreciation will happen right at the start of the car’s ownership. As soon as it can no longer be sold as “new”, it’s price dips dramatically. From then on, depreciation tends to move at a more measured rate, bearing in mind that the car has been looked after well. So, buying a car that’s been used for a year actually causes you to lose more through depreciation than buying a new car.
You can get better with a lease
One reason that many people buy new is that they want the feel of a car that’s in much better condition. There’s nothing wrong with having a priority on the quality of the ride rather than the cost. But in that case, couldn’t you do better by getting into an arrangement where you pay less to drive a car that performs much better than if you had bought one? Leasing cars allow people to temporarily own cars that are much more up-market than they could usually afford. Leasing a car also allows you to immediately start driving cars in great condition without having to pay upfront in a big down-payment.
Used offers much better deals
As mentioned above, a car that’s even a year old will cost less than a new car. But you can also get much better financing deals on used cars. The best 72 month used auto loan rates are significantly more manageable than the equivalent loan rates you would get on a new car. Your concern with used cars might be that they don’t run as well as new cars and you can’t be sure that they’re in great condition. However, with the savings you’ve made through financing, you might easily be able to afford air intake improvements on the engine and suspension improvements that can make it drive almost like new. Getting a used car in better condition simply means spending a little of your savings on getting it inspected, too.
The logic presented above isn’t going to convince everyone. There is undoubtedly an emotional allure to buying a new car. It’s a statement as well as a practical buy. As long as you know that, you’re free to spend however you want. However, if you want a better investment, a better price, or better bang for your buck you will rarely get it a new car purchase.