Should you Buy a New Car?

By: Levi Quinn

Into every life some car payments must fall. No matter what you do, you will have to purchase at least three or four cars over the course of your life, and it will be expensive no matter how you look at it. The question that often crosses people's minds as they enter this process is, "Should I buy a new car?"

When you buy a new car, you aren't purchasing someone else's problems. You know that you aren't getting a car that was in a terrible, axle-bending wreck that has been disguised with good bodywork. Of course, some prestige does come along with having a shiny new Hotrod or a sleek businesslike automobile. There is the pleasure that comes from climbing into all that new-car smell, knowing that no soft drink was ever spilled on the seats and that everything works perfectly.

Other pros of buying a new car include a full warranty and the decreased likelihood that something major will go wrong with the car in the near future - and even the more distant future. You may also have an easier time negotiating a price you like with the dealer or profit from a manufacturer's special.

If the money in your bank account is important to you, most of these "pros" are simply a smoke screen.

Even though a new car has never had an owner, that doesn't mean it is free of problems. Lemons come off the factory line every day, and it is impossible to tell if you are about to purchase one. In addition, you have no way of knowing how honest the new car salesperson is being with you, any more than you can know how honest the used car salesperson or the used car's owner is being with you. Purchasing a car is a gamble, whether you are buying old or new.

You cannot escape the fact that the car for which you will be forking over payments will be new only until you drive it off the lot. Any financial expert in the world will tell you that a new car is a liability because it depreciates in value the minute you drive away from the dealer. You will not be able to make money on it at resale. You will only lose money on a new car because of depreciation, astronomical interest-bearing monthly payments that severely bloat the final cost of the automobile, and of course, your insurance rates.

Look at it like this. In 2007, you purchase a 2008 Prism. Your friend admires your car, but continues to drive his old Ford. In 2010, that friend decides it's time for him to ditch the Ford for a "new" car and purchases his very own 2008 Prism - used. The vehicle is two years old. Your car certainly isn't the new car you bought and are paying for - it too is two years old. However, your friend is now driving essentially the same car for a much lower monthly payment and a lower insurance bill.

The only people who really benefit from the sale of a new car are the new car salespersons.

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