Slam The Brakes & Think, Is Buying New Really For You
There is absolutely no denying that there is something exciting, wonderful and fanciful about buying a brand spanking new car.
There is something about knowing that you are the first person to ever own it. There is something nice about walking into a sparkling showroom and picking out a sparkling car. There is something nice about knowing that you have not bought into something old, you have purchased something new, something top of the range and state of the art, something with the latest gizmos and gadgets.
What’s more, you get to soak up that new car smell. There isn’t that fusty smell that comes with a car bought off a long time smoker or the chance of finding mold covered raisins in between the seats.
But that isn’t all because buying a new car comes with a massive pot of practical perks, such as lower maintenance costs, warranties, unused brakes and unworn cambelts. You get that peace of mind that is totally unobtainable when you pop along to someone’s house in the bank end of nowhere, swapping cash for a car and leaving on a wish and a prayer.
However, despite all of these perks – these gorgeous perks – buying a new car is rarely the smartest move you can make financially. That is why the used-car market is becoming more and more popular. Of course, it is completely your call and your decision, but to help you out a little we are going to present some of the top arguments not to buy a brand new car.
You’ll Pay More, Loads More
This is the most obvious one because the newer the car the more money it is going to cost. Of course, you may be one of the lucky people on earth where money is not an issue to you. However, most people are required to be money-savvy, and that means they will want to look at the entire cost of a new car.
As such, it is important to know that buying a new car not only means you’ll have to stump up more as a deposit, and pay more per month in financial installments, it will also affect other costs too. Newer cars come with higher insurance premiums, which is simply because the car is worth more and so the risk is higher. Taxes can often equate to more too. This may not be higher road tax, in which new cars can often pinch a few dollars, but it could be that you live in a state which has high personal property taxes, and so the newer and more expensive your car the more you’ll have to pay in taxes each year.
We know, a new car means the latest everything, but buying isn’t your only option. It could be that you want to drive the new Civic Coupe LX, in which case it is just a matter of leasing a car from Don Wessel Honda. Yes, leasing, which is essentially just another way of getting more car for your money. What’s more, almost every car manufacturer has leasing options available, so no matter what your preference, you’ll be able to enjoy all the perks of a car, except for actually owning it.
New Cars Depreciate Faster Than They Can Drive
On average, a new car depreciates 21% in the first 12 months. Twenty-one percent. We know that isn’t fair, but when has life ever been fair. The important thing to take from that statement isn’t the figure, though, it is the word average. That means your car could depreciate at an even more astronomical rate depending on which car to buy. There is a hidden catch in all of this too, which is, if you end up buying your car without a down payment, or if your monthly payments aren’t high enough to compensate the depreciation, you could, in fact, end up owing more than your car is actually worth, much more.
Yes, we are talking about negative equity – dun, dun, duuuuuuuuun! Obviously, if you plan on owning your new car until you’ve paid every cent off, then this may not be an issue to you whatsoever. However, most people like to trade in their cars every two to three years; a trait that is especially true with people that want the latest everything, including cars. That’s when negative equity on your current car can massively hike the price of your next car. Anything you owe on your car doesn’t disappear. It simply gets added onto your next car. That could make a huge dent in your finances and your hopes. Sorry.
That’s where buying a used car comes in. You’ll be buying a car at a price that is much more comparable to its actual value, which is because it will have endured the worst of its depreciation, allowing it to hold onto its worth better.
More Bang For Your Buck
As we have no discovered, cars depreciate at a horrendous rate in their first year, which offers itself nicely to the used market. In short, buying a car that is even just one year old can save you a small fortune, and you’ll have a car that is very almost top of the line. The spec will still be high, the mileage will still be low and the warranty will still stand.
Let’s take a car that retails at $30,000 brand new. Then let’s take the average first-year depreciation of 21%. One year later and you can get that same car for $23,700, and that is average. You are essentially being allowed to buy a brand new car without having to pay the price for a brand new car. Now that has got to be an attractive proposition to anyone.
You’ll still have the smart leather seats, the new alloys, the sunroof, the latest built-in satellite navigation system, the silvery dashboard, the sensors, the automatic lights, heated seats and dual temperature control, the latest sound system and just about every other gadget you could possibly want. Yet you will be able to save almost $7,000. That is incredible.