Many financial gurus will tell you that buying a brand new car is akin to enslaving yourself with debt for the rest of your life. Depreciation, interest and higher insurance make that $15,000 econo sedan into a $1.2M cost of ownership nightmare over the long haul. Is this true? It can be, for some people in particular situations, but I will assume here we are smart enough not to overstretch your reasonable new car budget given your income and you will avoid super-high interest rates.
The question is, when you have the option to do either, do you stick with a used car to save the money, or spring for new just because you can ?
If you have the credit and income or cash and CAN afford a new car, keeping in mind that it is a more costly in the long run (as the experts point out) than a used car, there ARE situations where buying a brand new car is a great idea, even though it's inevitably a long-term financial hit.
1. You can easily afford it, and you live in an apartment.
Ever changed a tire, washed a car, performed an oil change, or done any maintenance work on a car in your apartment parking ? Right, that's either impossible or it sucks. Or worse, you get in trouble with the community management, your neighbors or even get your car towed.
Having a house with a garage or other work area to do basic maintenance on a car allows more flexibility when it comes to keeping that clunker going for a while longer. But in an apartment situation, once your car hits middle-age, it's often just better to go new if you can swing it.
2. You can afford the monthly payment on a modest new car, but you can't absorb a surprise $2000 major repair.
Conventional wisdom says if you're that broke you definitely SHOULDN'T buy a new car. But... There is a lot to be said for relatively fixed monthly expenses when you're on a tight budget. If you rely on a car to get to work and you're driving a ticking (sometimes literally) time bomb that could suddenly demand two months rent to get back on the road, a new car may be a better option IF you go conservative and get something modest and economical (i.e. $20,000 not $40,000).
3. You have a critical need for reliability (if your car failing you would be much more than just an inconvenience).
If you live relatively close to work, can use public transportation or can mooch rides from friends or family as alternative transport if your car dies, you can save money getting by using a beater that will work 98.5% of the time.
You may need the 99.9% reliability that (we hope) a new car should provide if for example:
You live in a rural area with a long commute into work. You have to drive yourself or family to critical medical appointments. Your job itself requires you to drive around a lot and a failures on the road could cost you business or eventually your job (delivery, real estate agent, services).
What I would say is NOT a reason to get a new car is for vanity or as a status symbol. Save your money, because you know what? Nobody cares! Everyone else is way too occupied with themselves to notice your rolling compensation complex and you're out the cash to boot !
Quality of life counts for a lot. Sometimes it's worth a payment. Sometimes not.
Fierce-Logic.com
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