20/10/2020
3 Reasons Why You Should Never Buy a Brand New Car
https://www.wisebread.com/3-reasons-why-you-should-never-buy-a-new-car
1. The Obvious Reason — You'll Pay More
If money is the least of your worries, it probably doesn't matter whether you buy new or used. But if you identify with the rest of us and you're pinching your pennies, you need a monthly payment that doesn't stretch your budget or cause unnecessary financial strain.
The good news is that buying a car doesn't have to complicate your financial life. If you have good credit and you're able to qualify for a new car loan with no hassles, banks may compete for your business and offer the best rate possible.
But even with low-rate auto financing on a new purchase, a new car will be more expensive than an older version of the same car. Not only because of the higher sale price — you'll also pay more in other areas. Brand new cars can have higher insurance premiums than used cars. And if you live in a state with personal property taxes, the newer your car, the more you'll pay in taxes each year.
2. Faster Depreciation and Negative Equity
It's not fair or right, but new cars depreciate faster than used vehicles. The sad reality is that the average new car can depreciate as much as 19% in its first year — and that's just an average. What does this mean for you? To put it simply, if you buy a brand new car without a down payment, or if your monthly loan payment isn't high enough to compensate for depreciation, you could end up owing more than the vehicle is worth.
3. You Get More for the Money Buying Used
Since cars depreciate rapidly within the first year, buying used is an opportunity to get more for less. I have a friend who purchased a less than one-year old Toyota Altis in 2020. It was a top-of-the-line Altis with wood grain, leather seats, sunroof, rims, heated seats, JBL sound system, dual temperature control, fully loaded. Just one year prior, the car sold for about ₱1,360,352 brand new. However, she was able to purchase the vehicle for a little more than ₱971,680. The car only had 13,000 miles and not a single scratch or stain. It was like buying a brand new car, without the brand new price tag.
What do you think? Are you a new car loyalist, or have you found value in buying not-so-new? I'd love to hear you take on this discussion in the comments below.
