I've never been able to afford a brand new car. i'm in my early 40s and prior generations used to buy brand new cars all the time at that age. I was saving for a good down payment but now the prices have doubled and it makes my savings feel like nothing. 10 year old cars are going for 15K now.
How many of us have never owned a brand new car?
DiscussionI’ve bought 2 brand new cars, both when I was younger. I’ll never do it again. I much prefer being able to pay cash for cars and being able to enjoy life. My car is good enough to take me in awesome trips that I wouldn’t be able to take if I had a new car payment.
why can't you pay cash for new cars?
A couple of reasons I don’t and wouldn’t recommend paying cash for a new car (or ever buying a new car):
Cost. A quick search for “cheapest car in America” shows the cheapest new cars being somewhere between $16,500-$24,000 dollars. Let’s hope $16,500 is actually the cheapest car available (I don’t think you’ll find one that cheap). I don’t have $33,000 in cash to put towards a car. A vast majority of people don’t have anywhere near that amount of cash saved up, so it’s not realistic unless you’re making a lot of money.
Repairs. As much as we don’t want to think otherwise, new cars do have things go wrong. If I shelled out $33,000 for new cars, I wouldn’t have any money to cover repairs. And if I got a warranty, then I’d basically be paying the cost of repairs at the time of purchase, making the purchase price even higher than $33,000.
Fewer choices. Going back to point 1, I wouldn’t be able to afford the car I want, so I’d have to settle for something I don’t really want. We have a Honda Odyssey with lots of features (dual climate control, heated seats, rear entertainment system, etc.). This car would have easily cost us $80,000 or more if bought new. I again refer you to point 1.
Depreciation. As we age and become more thoughtful about building wealth; purchasing new cars takes that in the wrong direction. We all know how quickly new cars depreciate. “Buy it today for $80,000; sell it tomorrow for $70,000” is the sentiment. I bought my 22 year old Subaru for $2,500; 3 years later KBB says it can sell for $2,000. I like that a lot better. A 3 year old new car would depreciate a lot more than $500 over 3 years. If I took the money I saved and put it in a HYSA, I’d be making money on what would have spent, giving me more money the next time I need to buy a used car.
I know there are people who will argue “but if I buy a used car today, I’ll need to buy another one in 5 years. If I buy a new car today, I won’t need to buy another one in 10 years, so it ends up being the same”. To which I would reply that the overall cost of new vs used tilts towards used. Insurance is lower; repairs are often lower cost (older parts cost less money); new cars can still have big problems.