Today I want to talk about something shiny, fast, and full of metal. I’m going to talk about vehicles and why you shouldn’t buy a new car. Everyone likes vehicles. Whether it’s a new truck, SUV, sports car, or a hybrid with great mileage, we all like the idea of a beautiful new car. When it comes to your finances, unfortunately there’s no beauty at all. There are 3 ways to own a vehicle. You can buy new with no previous owners or mileage, you can buy used with a previous owner and mileage, or you can lease.
I want to discuss the concept of buying a new car and why we suggest you don’t do so in the future. Many people would assume buying a new car is best. It has no wear and tear, it’s the best technology for that time, and the inside has that new car smell what’s better than that? The problem is the return you get on purchasing these. The second you purchase a new vehicle and drive it off the lot, it becomes used. After this the market price for the vehicle immediately drops roughly 20%. To me this concept is crazy. People tend to be cautious with their extra cash due to the risk of possible market declines, yet putting money into that new car is a guaranteed decrease of roughly 20%!
Now everyone of course can make their own decisions on this and maybe just hate the idea of there being any miles at all on a vehicle, but it’s our job to break down the facts when it comes to your finances. We suggest buying a lightly used vehicle. What I mean by this is finding a car maybe 2-3 years old with less than 20k miles. The car drives just as well, most cases there are not additional maintenance costs, and you can find these vehicles at a huge discount! No one notices if you’re in a 2017 car instead of a 2019 and you can get 20-25% more for your money. Seems like a no brainer to us.
When searching for a car, make sure to include all the costs as well. Understand the maintenance your car will require. Luxury cars generally have higher maintenance costs due to the expertise and more expensive parts that are needed. Also include the insurance costs for the vehicle and the lower or higher gas mileage you might get out of the new vehicle.
Hopefully this can help you with your new car search, we suggest making it a used car search and use that extra money for something that will actually benefit you and your future. As always remember to Invest in You.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This is a hypothetical example and is not representative of any specific investment. Your results may vary.