Money Mic: Why I Would Never Buy a New Car

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People have a lot of opinions about money.

In our “Money Mic” series, we hand over the podium to someone with a strong opinion on a financial topic. These are their views, not ours, but we welcome your responses.

Today, LearnVest Financial Planner Sophia Bera, CFP® tells us why she would never spend money on a new car—even though she lives in Minnesota and drives every day.

Dreaming about an exotic vacation? Tired of that $3,000 credit card balance? Wishing for a home renovation?

Maybe the reason you’re having trouble affording those things is because of your car.

After reading Zac Bissonnette’s new book, “How to Be Richer, Smarter and Better Looking Than Your Parents,” I don’t understand why so many people feel compelled to own cars they can’t afford. In it, he writes that the average monthly payment on a new car is $479, and that doesn’t even count the gas and insurance.

If you ask me, that’s crazy!

Dr. Thomas Stanley, who co-authored “The Millionaire Next Door“ and wrote “Millionaire Women Next Door,” has been studying millionaires for years. In his research, he found that the most popular car make among millionaires is a Toyota. Bet you didn’t guess that one! Bissonnette found similar results–in his book he says, “Most drivers of luxury cars aren’t rich, and most rich people don’t drive luxury cars.”

I Still Drive the Car I Got at Age 16

I drive the only car I’ve ever owned, a 1997 Toyota Corolla I’ve had since I was 16. It was a used car when I got it, and it now has almost 200,000 miles on it. I’m hoping it makes it to 250,000! My husband bought a 1998 hail-damaged Honda Civic with 60,000 miles on it for less than $5,000. That was seven years ago, and he’s still driving it. Yes, he bought a car that was hail-damaged. But it’s been an extremely reliable vehicle. He paid it off in nine months and hasn’t had a car payment since.

People sometimes forget about all the fun things you can do when you don’t have a car payment. My husband and I love to travel, and we choose to drive really cheap cars so that we can save money every month for a yearly vacation.  We’ve been to amazing places all over the world. Last year we went to Thailand for two weeks, and we’ve visited Argentina, Italy, Mexico and Puerto Rico.

The thing is, we wouldn’t be able to travel as much if either of us had a car payment. And money is all about choices.

In our case, traveling feeds our souls, so we choose to do it. If that means we drive unimpressive vehicles, that’s okay with us. (We also max out our Roth IRAs each year, for those who are curious.)

The Average U.S. Household Can’t Afford This!

I can’t imagine spending almost $500 a month on a car. The average American household, which makes about $51,000 per year, can’t afford to spend that much. Many financial experts recommend that you keep your car-related expenses (car payment, gas & insurance) under 20% of your net pay, but if you’re buying a $30,000 car on a $51,000 salary, then you could be spending around 25% of your net pay on car-related expenses.

At LearnVest, we recommend devoting 50% of your budget to essentials, which includes not only your transportation costs but also your housing, utilities and groceries. If you’re spending 25% of your overall budget on car payments, that only leaves you 25% for your home and food.

By the way, if you’re one of those people looking to cut back in other places so you can achieve your financial goals, LearnVest came up with Cut Your Costs Bootcamp, a ten-day email program to help you save more money around the house, on utilities and, yes, even on your transportation costs.

You Could Do Something Way Better With That Money

When I suggest that people sock away $416 a month to max out their Roth IRA, some think that sounds like a ton of money. But many of those same people view a $400-to-$500-a-month car payment as a necessity.

It isn’t.

Saving for retirement should be the priority, not driving a nice car. If instead of outlandish car payments, you maxed out your Roth IRA every year for 40 years and earned 7% interest, you’d retire with over a million dollars!

(Want to get started saving for retirement? Our retirement checklist will help you out.)

The problem is that so many 20-somethings get caught in the car-buying trap, then have a car payment for the rest of their lives. Or they get sucked into leasing a vehicle so they can drive an even nicer car. Don’t be one of those people. Keeping up with the Joneses is ultimately pointless, as even the wealthiest among us feel poor sometimes.

An even better option: Buy your next car with cash.

If you have a monthly car payment, you’re wasting money on financing costs that could otherwise be going into your emergency fund or your retirement accounts each month. According to Forbes, the average new car costs $30,303 in 2012. If you financed 100% of a new 2012 car over six years with a 5% interest rate, your payment would be $488 per month. You will have paid $4,835 in interest over the life of the loan.

So your $30,000 car would end up costing you $35,138. That’s $5,000+ you could have put to good use elsewhere.

If you “must” finance a car, check out something in the $5,000-$15,000 range and try to finance it in half the time (three years). But to my mind, you can get a car for a few thousand dollars, and you may be surprised how long it can last.

How to Get Out of the Trap

What can you do instead? Trade in your car for a less expensive one and cut your car payment in half. If you traded in your $30,000 vehicle for one that cost half as much, you’d already owe $15,000 less. Consider doing that first. Then pay extra on your loan. Once your car is paid off, keep saving the amount you used to spend on your car payment so you can pay cash for your next vehicle.

The next time you’re shopping for a new vehicle, ask yourself: Do you want to drive an impressive car, or do you want to be a millionaire?

I guess you already know what I chose.

Sophia Bera is a Certified Financial Planner® on the LearnVest team. She lives with her husband in Minnesota.

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LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the people interviewed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

  • LaurenLever

    I only have a $269 a month car payment (coupled with a $350 student loans,omg what a bunch of debt), but absolutely it was probably one of the stupidest purchases I have made, as I had enough to really put a down payment on a cheaper vehicle, but Miss always gets what she wants had to get that cute little Cube, what a boneheaded move.. x_x

    • Gsimms22

      That’s why they say hind sight is 20/20.

      Learn from your mistakes and you’ll be OK.

      Smart people learn from their mistakes; wise people learn from other’s mistakes!

  • anthonysmom

    LOVE this article!  I drive a 2003 Jeep Liberty that I stupidly bought on a 48-month, $400/month lease when it was brand new.  When the lease was about to expire, we explored our options and decided to purchase it and financed $13K.  So we kinda paid for my Jeep twice…  The good news, Libby is still going strong and has 145K miles on her.  We put in a new engine just over a year ago and weighed the cost of doing that (about $5k) vs. purchasing a “new to me” $5k vehicle.  We decided to keep what we had a complete history on.  It was worth it.  I’m confident that Libby has a lot of life left in her and when the time comes to replace, I definitely WON’T buy a brand new car.  I’ll buy a used car that someone else took the depreciation hit on…  My husband drives a 2001 Jeep Cherokee w/125k miles and my 22-y-o just sold his 1996 Jeep Cherokee that had 250k miles.  We like Jeeps and we drive’em until they won’t drive any more!  And our retirement accounts?  They’re VERY fat & happy… :-)

    • Zorba45

      Why did an engine cost $5k? I’ve rebuilt well over a thousand and never paid more than $600 for parts and head surfacing.

  • Sheila

    Several years ago I decided I couldn’t afford to buy new at the time so I ended up buying a used Honda Accord.  After that car I doubt I’ll ever buy used again.  For the first 6 months something went wrong with it every month.  First both headlights went out, at night, out of town, on a Sunday.  I had to drive 4 hours home with my brights on.  Then I had a heat shield fall off, a sensor went bad, then when spring came the car started leaking after it rained.  Ever try driving to an interview with water pouring in your car and falling all over your skirt.  Granted the dealership covered most of the problems, but the one that really got me was the drivers side window didn’t always work.  Conveniently it would get stuck and not come down any time I pulled up to an ATM, drive through window or toll gate. It once got stuck while I was out of town before a rainstorm so I had to pay $100 just to get the window up.  After 3 years of haggling with the dealership to try to get them to repair it I decided to trade it off.  I got a 2010 Toyota with a 2 year maintenance package for free and 0% interest making my payments $267 a month.  This is the highest car payment I’ve ever had, but honestly all the problems I had with that used car I bought make it worth the higher payments.  Sometimes reliability is just more important.

  • Jennifer

    How nice for you that your 200,000 mile car has been so reliable. When a used car is not so reliable – and ends up costing more each month than a new car – an inexpensive, reliable new car is the smart decision.

    • Jessica

      That is exactly what happened to me.  My car needed expensive transmission repairs and ended up dying for good less than 3 years later.  I paid more in repairs than I did on the car.  Now I have an affordable monthly payment and my car is under warranty.

  • http://www.nohelphere.com Sarah Goshman

    I learned this lesson the hard way… I took out a 3-year loan on a $26,000 car and ended up putting other expenses on credit cards in order to keep making those car payments. Happily, the car is now 6 years old with 120,000 miles and no payment, the credit cards are paid off, and I plan to keep it that way for a very long time. Wish I had read this article 6 years ago though… thanks, Sophia! Your 200,000 miles give me hope… :-)

  • Leah

    So funny, “it’s okay to spend thousands of dollars on travel every year like me, but you must want to be broke if you buy a new car.”

    I just LOVE how people justify various financial behaviors.

    It’s called PERSONAL finance.

    It’s great you found that driving beaters makes you feel better about spending on travel. But let’s not judge people who sacrificed new clothes or eating our or anything else so that they could buy a new car that gives them peace of mind on the road. 

  • JQ06617

    Here’s my 3-reason for not buying a brand new car….
    1. The value depreciates 20% once you drive it out of the lot.
    2. You will pay  higher insurance premium on a new car ( duh, of course) and
    3. You will pay higher  tax and registration fees on a new car than an older car.

    There goes your Roth IRA money….

    • Medjynna

      you wrong i get  discount for driving a new car at traveler insurance

    • drv

       The “financial” value depreciates 20%, but this statement seems ridiculous given that most people don’t trade in their car right after they drive it off the lot. A car is an expense, not an investment. I only buy new and don’t bat an eye and spending $700 a year for insurance on my brand new car (clean driving record). Registration per year ~ $60 with a vanity plate. People make it seem that people that buy new cars are being financially irresponsible. It’s only irresponsible if you can’t afford a new car. It seems that you place a high value on retirement and are willing to sacrifice comforts for today for the future. That’s fine too, but some of us have money in our retirement accounts and can buy new cars.

  • http://www.facebook.com/richard.bonaduce Richard Bonaduce

    I also agree with this, and have a slightly similar story…
    I traded is supposedly great car (a Chrysler LaBaron GTS with black leather interior and digital dash that got horrible MPG) on a new Daihatsu Charade with three cylinders and no AC.  The thing didn’t even have floor mats1  I paid a bit extra for a rear defroster!  Anyway, even though I was a bit upside down in this deal, the Charade was so inexpensive I had a payment of $165a month for five years.  I did that and paid it off, and drove it for another SEVEN. One of the best car-decisions I’ve ever made in my life!

    • Joeblow

      I had a Daihatsu Charade also for 12 years and it never broke down….also no A/C in the car!

  • http://twitter.com/pravsr Praveen

    Just get on the bus! It’s a lot simpler.. I know it’s gonna take forever to get from A to  B but hey, you can nap.. or read the newspaper. :)

    You can also get a Zipcar subscription for emergency uses..

  • Mjl71459

    Being in the insurance/car repair business, I only buy new. If you seen how some of these vehicles are fixed and sitting on used lots with clean CARFAX,s and dealer certified, it’s a joke. Some of those vehicles are so unsafe! It might look pretty and shiny, but it’s a nightmare underneath.

    • Sheila

      I’d have to agree.  I bought my car in December and the following spring when it rained I discovered that my car leaked.  After taking it back to the dealership they told me that there was a piece missing that went between the windshield and the body of the car that was missing which indicated to me that the windshield must have been replaced at some point.  I can only wonder about the rest of the car.

      • Ellie

        Windshields take a lot of beatings and get replaced often. It could have been a rock off a big rig. Have your mechanic look the car over if you think there maybe other issues. Better to know now than later.

        • Sheila

           That was only one of several problems in the first 6 months I owned it.  I kept that car for about 3 years and then traded it off.  I never did figure out what had happened to the windshield.

  • http://twitter.com/emraldsong Steph

    It’s interesting to see what everyone’s priorities are.  Personally, I don’t mind spending money on a car.  I commute and spend 2 hours a day in it, and the six-year-old car that I bought new has 130,000+ miles.  It wasn’t expensive (about $19,000), but it’s comfortable and has most of the amenities I want.  It’s worth it to me to spend a bit more on something I spend so much time driving.

  • Trumanwgrandey

    Why would interest rate be more than 2.5% on a new car?  Check with a credit union.  Granted that many buy a more expensive car than they “need,” many also do not regard their car as ‘transportation’ but as reflecting their status, style, and or  physical attractiveness, as a hundred years of ads have taught them.  

  • roadkill612

    Never understood a better car then u can afford , on credit, for prestige. that is so dumb – u r not your car. If thats your angle for seduction, good luck

    As it says, the rich drive toyotas, so if you wanna dupe a rich mate, get a corolla

    I not only pay cash, I self insure – so cheap I can walk away. I truly hate that insurance racket.

    I got lucky w/ my current car, but I always get lucky?

    A medium sized ford wagon 4L 6cyl. zero rust, 60k miles, 6 seater , 30yrs old $350, tows well, a roof area like a big pickup, u could shift a piano on it

    undrivable but no biggie – some hoses, a brake booster & some tlc by a cheap amateur mechanic. leave the ambitious stuff for the pros but only that stuff – they are dear

    have spent ~1k$ in 7 years on it

    needs another $k spent on some comforts, but it can wait if i rarely use it

    havnt garaged it as well as i should have  so its got some ugly spots on it, but til recently, I actually got compliments on it as a cool car – even from teens

    think a smaller version of the Wallyworld wagon, chrome racks & all

    dont drive much but would drive across a continent in it tomorrow

  • roadkill612

    interesting factor is insurance

    a report by nrma – oz aaa – shows that a 10kph ~6-7mph collision head on with a barrier results in a total writeoff given cost of spares & repairs

    many cars have glass jaws & parts is where the money is for automakers

    on a good 10yr old car, parts are almost free from junkyards

     

  • Sallyq

    It’s funny that this author thinks her inability to manage her money is typical of everyone…

  • pipe creek

    I love it when people with no children tell you you should be driving a 10+ year old car with over 100,000 miles on it to save money for “more important things”!  When you start driving with an infant or young children, we’ll see how you feel about the car that might die on the highway leaving you stranded. Safety is a TOP priority, not a luxury.

  • saltyc

    Car market has changed, like many others have pointed out!  I too never thought I’d buy new but when I started shopping to replace my ever less-reliable 13 yr old Altima I realized late model used prices just didn’t offer enough discount over new so I went with a new base model Accord - took it home with 32 miles on it and a warranty for 0.9% interest.  I will drive it 10+ years and use my cash I had saved for a new car to pay down my 6.5% student loans and save me BEAUCOUP in interest.  Sold the Altima too btw on craigslist for $2,000 - glad I bought a new car and sold that thing before it gives up the ghost – leaving me stranded without a ride and unable to get a dime for it!

  • Medjynnaz

    well how much have you spent on car repair.

  • Dustin

    All I can say is that you need a reliable car to get to work and get that 50k.  Car trouble excuses at work only work so many times.  It is very hard to find a good used car(why sell?) and used cars are selling at historical highs nowadays.  My advice is to buy a fuel efficient NEW car.  Pay cash if you can and buy only the options you need(more things to break).  Then be religious about maintaining it and this strategy will give you the best bang for the buck.  This is what companies do and for good reason.   

  • Tony J. Tarquinio

    I believe this article gives very good food for thought.  However, I would rather have a reliable mode of transportation than to leave my money in foreign countries.  There are enough American dollars going there and never coming back.  I have owned new and used vehicles.  Recently, I have been seriously considering leasing.  I am putting a sharp pencil to this project.  Buy new, and you really get skinned, no matter how you look at it.  The depreciation alone within the first three years staggers the imagination.  On average 47%, nearly half of the vehicle’s value has slipped down the drain.  Plus with ownership, after the vehicle is out of warranty, you pay for any repairs or maintenance.  With leasing, you have a minimal monthly payment.  Usually in the vicinity of $180.00 to $250.00 depending on the model.  Basically, at this point, you are buying the depreciation.  You will always have a monthly payment.  However, you will always have a new car, (should you choose to continue leasing) and never have a vehicle repair bill.  At this point, I do not see the advantage of ownership.  Only possible advantage is if someone hits bottom and needs to collateralize the car for a loan.  At which time, he should not even be applying for a loan, and wouldn’t get approval if he did. My background has been in Accounting, and it has always been my policy to never incur finance charges on something that depreciates in value every month.  Thanks for reading.
    Tony

    • TJT

      American consumerism…. Tony, never say never… You enjoy the good quality life because that “money” comes back to USA… Also, the author mentioned what “feeds” HER soul (which is obviously will never be case with you)! 

  • Fela247

    While Mrs. Bera coments on new car ownership is quite commendable as well as economically prudent, I wonder who her audience is ? Is it twentysomethings? Is it her basic assumption that we all live in states where public transportation is a viable alternative option?  As pointed out safety on the road is a primay concern for many drivers with young children, as well as many middle-aged, elderly, disabled persons. As for Toyota’s remember the recall in 2010?  So the piece of mind that a new car brings for some folks is worth the investment, abeit not a luxuary car. Good article overall through.

  • TJ

    My father is a mechanic and he always, always told me to buy new because 90 percent of used cars needed repairs. Many times he saw people buy used cars and spend far too much money on repairs. My car is 10 years old, was bought brand new and the payment was only $200 a month. Affordable new cars are out there. Just because people want to buy very expensive cars doesn’t mean that there aren’t new, affordable cars out there.

    • Sheila

      Totally agree!  I have my highest payment now at $267 and I think that’s pretty good.  Last time I bought used I had a different problem each month for the first 6 months.  Coming from a mechanic I think that’s excellent advice.

  • CrankyFranky

    live in Oz, but just back from 3 weeks in Los Angeles where freeway cruise control is very nice to have.

    My perspective may differ, but I have always bought used and saved heaps – my analysis suggests the lifetime net saving equates to the difference in price, e.g. my reliable low-maintenance 1991 Honda Civic bought in 2003 for $5k (now worth $3k) vs a new one for guess $25k – that $20k difference represents 4 nice overseas holidays for me and my partner.

    Nearing retirement, I’d guess that I’ve saved maybe $2-5kpa over having new cars – multiply that by 30 years looks like $60-150k plus compounded interest – that should add a few years to my enjoyable retirement lifestyle.

  • Tania

    I don’t think there’s anything wrong with buying a new car if you are in an area that a reliable used car, which was properly cared for is hard to find for a decent price. (I’m on a rock in the middle of the ocean, mind you.). I’d say shop around and look at both used and new options and don’t forget to consider the financing costs (as you also mentioned) in your decision. I whole heartedly agree about luxury cars. I have owned one in my life (an Infiniti G35) because my ex-husband was into cars. I did love that ride but I don’t see it as a necessity and don’t plan on ever having a luxury line vehicle again. I plan to run my current Honda into the ground and then replace it with another mid-range reliable Japanese car. Paid cash for it, it was on sale and we got the cash for clunkers rebate on it so it was less, not more, than a used one would have been with low years/mileage.

  • chelee

    After having car payments (at least two) for our entire marriage, my husband and I saved and paid off both our vehicles several years ago. In the past we would have already traded them in on newer cars (usually used, sometimes new). At the time mine had only around 50k miles and his around 100k miles (his is a Nissan, so expected to go for a long time). While we’ve saved $750/mo in car payments since that time, we’ve also spent around $500/mo on repairs and maintenance when I average it out. Not counting fees like towing and lost hours at work when hubby’s car breaks down. Or extra gas used when I have to drive him to work and back for days or weeks while his car is in the shop. True, he’s only had three major problems in the 4 years since we paid off his car, but when you add in the minor ones it adds up.

    We recently decided to buy a new vehicle for hubby’s commute…he’s gone from getting 21-22mpg to 38-40mpg. Our new car deal came with a 100,000 mile warranty and the safety features of the new car far exceed his 2002 Nissan. We went with a Hyundai because they tend to retain their value. And we got free maintenance (oil changes, tire rotations, etc.) for five years.

    We’ll be ahead for sure, even with the slight increase in insurance cost plus the $400/mo payment.

  • MsKe

    I have to disagree with this article. Assuming everyone who buys a new car is spending 25% or more of their income on a car payment is as ridiculous as suggesting all used cars found for under 5K will drive, without extensive repairs, for years and years. A new car can be a frugal choice, it is all matter of how it’s paid for, cash or 0% financing, and how often it is replaced.

  • Tekin

    In wild capitalist system, if everyone uses their cars for 7-8 years and junk, how can car companies sell cars and make profit ?????

  • Lala

    I financed a new car with no down payment rather than buy one with the $10 000 I had saved because I was able to get financing with 1.9% interest. I invested the $10 000 and now earn 5-7% interest on it, which to me makes financing the better financial decision.

  • James

    I see a lot of people justifying there new car purchases on these comments. If you wanted a new car for chap that’s fine. The point of this article is that a used car is cheaper. You want the truth it is. Take 5 k buy a used Japanese car there won’t be many issues. Even if there are issues new rebuilt engine 500 new ac unit 120 new shocks 200. You can completely rebuild a 2000 honda civic for 5k. So even if you bought a Honda for 5k hade to replace half of all major components ( highly and I mean highly unlikely) got ripped off on labor for 2500 ( these are extremely easy cars to work on why you see so many modded ones on street by kids) your still only looking at 10k on a horrible worst case serino used civic.

  • Stu

    Here are my rules that I follow:
    For buying a house: Shop for a house you can afford on a 10-15 yr loan…That’s your limit, then get the 30 yr fixed and make extra payments each yr. That way it will give you a buffer.
    For buying a car: Shop for a car you can afford on a two yr loan…That’s your limit, then get a 3 yr loan and make extra payments. Or 20% of you net income…So let’s say you make $55K after taxes then you can afford an $11K car. That’s your limit. If you have a down payment add that to your limit and that’s what you can afford. Also, don’t think about what you can afford as a payment. That is the biggest mistake of them all.
    By living by these rules; I’ve been able to pay cash for my truck and pay off my house in 3 yrs. I’m completely debt free and save over 65% of my monthly paycheck. Net worth: House $180K, Truck $9K, Investments $60K, debt $0=$250K. I’m 38 active duty Air Force (Enlisted) for 21 yrs…no Wife or kids. I think I’ve done well except for the Wife and kid part.

  • david webster

    i bought a new chevy pickup 2 years ago i usually buy used drive about 50,000 km per year We have our own shop sometimes used cars are too money compared to new. It depends if need a good car and your cost to do repair the discount programs on left over new cars you look at cost per mile I often buy used cars cheap under $1000 or old police cars during a recession the price used cars in good shape are over priced compared to new. i also have another pickup bought new in 1993 still on road. We have our own shop and get parts cheaper. I have seen too many people spend too much repairing old minivans. we bought a (new) pickup full size with all needed options ( including traction control ) with all discounts in canada for $13.000 with 110,000 km it would still sell for $6,500 i not going to sell today because even with my gm $ it still cost $16,000 or $9,500 difference with purchase of new tires and other repairs cost 2 cents per km for insurance 2.3 cents for repairs per km and 19.2 cents per km for fuel and 6 cent per km or 9 cents per km for dep for a total cost of 29.5 p km or 32.5 p km 32.5 which is same as running a used pickup

  • Nita

    I sure hope I can get some good advice. I bought a 2013 Ford Edge last year in Sept. Gasp.. I spent 38,000 on this vehicle. I owe 19,000 my payments are 308.00. At
    1.9%. Part of me says hang in there, enjoy the vehicle it’s safe and fits my needs. However, my desire to lighten the load by trading it in won’t go away. What I would hope to do is trade and owe perhaps 13,000-15,000. I know I would loose, but in the end hopefully be more at peace with my decision.What makes it difficult is that I can see keeping this vehicle for the long haul. Thank you.
    Perplexed in Virginia

  • Michael

    There are too many variables in making an automobile purchase to make a blanket statement such as this.

    This article is no different than the person who makes $300,000 per year telling everyone how stupid it is to finance a home rather than pay cash. Sure, if you have a ton of money laying aound that makes sense, but this is not the reality for many people.

    There are a lot of people out there that need a reliable vehicle, and even numbers show that a new vehicle is considerably more reliable than a 5 year old vehicle.

    IMO, the issue is not about whether to buy new or used, the issue would be people buying a car out of there means. For instance, if you have bad or mediocre credit, then do not buy an expensive, because the high interest will skyrocket that payment. Also another problem is a lot of people who buy new tend to be trading in their previous purchase that a lot of times has negative equity.

    So in my opinion, a helpful article would be more about buying a vehicle, whether ner or used, within your means. And how not to incur more debt by purchasing an expensive vehicle at a high interest rate, or by trading in a vehicle that is “upside down”.

  • Quinn Gayer

    I also agree, driving your old cars or used cars are an amazing idea. You don’t have to spend huge on its repairs and they give good mileage. But if you don’t maintain your car it won’t be in a good condition for a long time. Recently I found a place called Iautobodyparts.com where you can learn all the car maintenance tips free of cost. So learn the tips and maintain your car.

  • rawiron1

    Wify and I are pulling down a buck sixty a year. We live in a 45 year old home with a 30 year fixed at 3.75%. Kid is healthy thank God. We prefer new cars since I do about 90% of the maintenance when the warranty expires and we keep a car on average of 9 years. We have a customized 2006 Scion xA (30mpg cty/hwy ave.) and a stock 2012 Camry Hybrid (39mpg cty/hwy ave.) which we only bought because her 2002 Gallant got totaled. My project car is a 1983 V8 Caprice (welding in new door skins at the moment). We won’t spend more than $30K for a car. At the moment we have paid off 60% of the new car and since we have been making extra payments Toyota lowered our monthly payment from $370 to $158 in hopes of squeezing more interest out of us. Not a chance! Our latest financial endeavors have been the purchase of an apartment and stock in the marijuana industry. You can’t out-save inflation so don’t bother trying.

  • GearTalks

    Clearly the article has touched a financial nerve, as all the “new car” people rush to comment to defend their purchases. The author said why “I” would never buy a used car; she’s just stating the reasons why she thinks it’s financially imprudent. If you like to waste money buying $30,000 new cars, that’s fine, but don’t try to convince the rest of us that it was a cheaper decision.
    In almost ZERO circumstances is a new car cheaper than a used one. Almost never. So forget about your justifications. Mathematically a used $10,000 car < $16k or $20k or $30k new car. If you don't understand that, then you will not really maximize your dollars in other areas of expense.