Why Buying a New Car is a Dumb Decision

4 Reasons Buying a New Car is the Dumbest Financial Decision you can make.

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Can we take a moment to talk about one of the biggest financial mistakes you can make in your lifetime? And it’s not just one mistake. This is a mistake you can make 10-15 times throughout your whole life! Yes. I am talking about the brand new car mistake. The mistake that is sitting in your driveway right now, and the mistake that’s sitting in mine.

Why do we do this? Why do we allow ourselves to believe that a new car is better than a used one? I have been fortunate to never fall into the new car trap, but before my husband and I were married, he fell into the trap hard and deep. Now, we’re paying for that mistake (even though he had a massive down payment).

Not everyone will agree, but I consider buying a new car one of the biggest wastes you can spend your money on. Even if you can pay it off immediately or have the cash, why throw away hard-earned money on something that depreciates in value so quickly? I’ve been trying to write this post for nearly a year now, but it has never seemed so relevant as now.

4 Reasons Buying a New Car is the Dumbest Financial Decision you can make.

See, Mike and I sold my paid off 03′ Monte Carlo before I left for Basic Training. (Note: I’m still at training.) It was an old car with more than 150k miles on it, so we felt this was a good time to let it go, considering I wouldn’t need a vehicle for BMT or Tech School. When it’s time for us to move to a duty station, we will [probably] need to be a two-car family again. Our goal is to be a single-car family for as long as possible, but it all varies on where we live. So in preparation for the worst [having to buy a car sometime next year], I wanted to talk about why purchasing a new car is such a dumb idea.

1. Major Depreciation

I thought everyone knew this, but supposedly, it doesn’t bother them. New cars lose around 10% of their value the minute you drive it off a lot. I wish I could all caps numbers, because I would yell {10%} at you as loud as possible. Do you know how much that is?!

Example: $30,000 SUV             After purchase worth: $27000

Example: $25,000 Car               After purchase worth: $22500

Example: $20,000 Car               After purchase worth: $18000

And that cycle continues. Do you know what I could do with $2-4k. I could pay off two private student loans or a huge credit card balance (biggest financial mistake #2). Doesn’t that make you sick? Don’t worry, it gets better. During that first year of ownership, tack on around 10% of additional depreciation. Do you know what your fancy car is worth now? Probably less than you owe on it, considering most people finance the entire purchase.

2. Additional High Costs

Let’s talk car insurance. Have you ever seen the insurance premiums on a new car? They are out of this world. Before you walk into that dealership, you better be sure you can afford the payment AND the insurance. What about sales tax? License and registration fees? How much is that going to be on your $25k purchase? Not fun, huh?

3. Excessive Worry

When you buy something expensive and new, it’s safe to say that you want to keep it beautiful and pristine condition. This translates across all purchases, from clothes to shoes to cars to homes. When you splurge on a brand new vehicle, the first scratch or scrape is going to devastate you. Do you think you’d feel that same amount of devastation if you bought something 2-3 years older? Probably not. The stress is not worth the costs!

4. Higher Payments. More Debt.

Probably a given, but the newer the car, the higher the payments. Very few people ever actually buy a new car outright, so you’ll probably be making payments of $300 or more, with added interest. You’ll be shackled to something that isn’t worth what you owe on it, and the payments are going to become a grudge you have to deal with every single month. Why put yourself through the stress? Buy a cheaper, reliable used car. Pay it off fast and be done with it. A new car isn’t necessarily more reliable than an old one. People buy new lemons ALL the time.

I beg you. Please do not fall into this trap and waste thousands of dollars on interest and depreciation. Just buy something a year or two old with 20 to 30k miles on it and drive it for 100 to 150k miles. No one cares what you’re driving except you, and if they do care, they’re not worth being friends with.

Want to see what your current car is worth? Go to KBB.com and evaluate! I can tell you that my husband’s 2013 Jetta is worth $12,000 less than what he paid for it, and it’s only been 2 years. DISGUSTING.

2 thoughts on “Why Buying a New Car is a Dumb Decision

  1. I recently made the HUGE mistake of financing a new car and now I regret it deeply! I wish I could turn back the hands of time and kept my old car .

    1. We are trying so hard to pay ours off fast. They are depreciating every day. It makes me sick looking at the value versus what we still owe on them. We didn’t buy new, and we got good deals, but I still wish we had saved up more before making those purchases.

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