Brand new car? I think NOT!
Monday, June 2nd, 2008
Speaking about cars with my cousin tonight, I feel I need to hip everyone to something. She has a “gas saving” car that I was sorta interested in. She mentioned that she’d let it go for what she owes on it. In my mind, I’m thinking $3k-$4k. She busts out with, she owes $8k on the car but it’s only worth $4k-$5k. I gave her a funny frown & Immediately she responded with, “I’ve learned from my mistake”.
Right then and there I wondered how many people I could help avoid “the mistake”. To put things into perspective, as soon as you drive off the lot with a brand new car you lose approximately 20% in value. So lets say you paid $20k for a brand new car… if you decide to sell it 1 month later, you’re basically selling it for $16K (or $4k below purchasing price).
FOR WHAT?… New car smell, warranty, or just the feeling of something brand new? Is any of that worth losing 20% as soon as you purchase it?
If you think about it, why not at least purchase the same year car used? Let someone else take the 20% loss while you have the perfectly fine warrantied car. My personal preference is to not buy anything within 2 years of the current year (maximizing my savings). That’s when the real bargains come in.
Truth is, most used cars bougt within the 2 year window are still under manuafacturer warranty. Also, you can purchase an extended warranty to ease your warranty worries. The $1k you’ll spend on an extended warranty is a massive amount of savings compared to the instant 20% loss you’ll get as soon as you drive off of the lot with something that continually depreciates in value.
So please take my information and make an informed decision when thinking about purchasing a car. Don’t make the mistake of buying new when you can buy slightly used for a helluva lot less.
Remember, the less we spend the more we have to pay down debt and become debt free. Let the snobs that have to impress someone take on the 20% loss of value.
I hope this helps someone from the “mistake”.
