New Cars Face Instant Depreciation
The news only gets worse from there: Your car is worth as little as 40 percent of its retail price five years after you buy it.
New Cars Bring Higher Costs
Your monthly payment isn't the only way a new car will assault your wallet. People forget that new cars (especially those with a loan) sometimes require higher levels of collision and liability coverage. The manufacturer suggested retail price also weighs heavily on the overall costs to insure it. What this means is that a new, expensive car might cost significantly more to insure than an older, used model.
But that's not all. Depending on where you live, the cost of license plates and vehicle registration are often commensurate with the retail value of your vehicle. In other words, your expensive new car will cause you to pay more for the privilege of parking on the street -- sometimes a necessity if you live in a large city.
The Psychological Benefits of Buying a Used Car
So now you know you'll likely save some cash by buying used instead of new, but what about the emotional aspect of your purchase?
Sure, you might feel slightly deflated when you drive off the lot with a used car instead of new. However, you might also feel a psychological boost from not having to worry too much about the upkeep of a brand new car.
Think about it. As we all know, life happens. That sweet little old lady at the grocery store is bound to slam her cart into whatever you're driving at a certain point. And we all know what birds do. In our complicated world, not having to stress over the elements or a little ding here or there is worth something.
The bottom line: It's your car and your decision, but it's important to understand what having a new car really means. Of course, it feels good to buy something new and show your friends and neighbors that you're doing well, but that new car smell might cost far more than you ever realized.