Is It Ever Worth It To Buy a Brand New Car?
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New car envy. We’ve all been there. We see an acquaintance roll up in their brand new Lexus/BMW/Audi, and we become envious. We drool over their heated leather seats, sunroof, and navigation system, and all of a sudden our five year old car starts to look beat up and dingy. I don’t know anyone who hasn’t been there.
Unfortunately, when we succumb to new car envy, it’s often another way we’re trying to keep up with the Joneses, and that feeling can quickly land us in debt with a deprecating asset, which is never a wise idea.
But I get it. Sometimes you really do need a new car. If you’re driving a 20-year-old beater on its last legs with repair costs that are worth more than the vehicle itself, you probably need a new car. Or if your car has stopped being reliable in helping you get from home to your job, you probably need a new car. But while you may need a new-to-you car, what you probably don’t need is a brand new car, and that’s what the point of this post is about.
Is It Ever Worth It To Buy a Brand New Car?
Is it ever worth it to buy a brand new car? I’d offer a resounding “No,” because there are so many other ways you could allocate your cash to serve you better. The thousands of dollars you save by simply forgoing that new car for a slightly older model are enough to save for retirement (such as maxing out an IRA for the year), fund future bucket-list travels, or save for a down payment on a house, all of which seem much more worthy causes in my eyes.
Let me be clear that I’m not judging anyone for owning a brand new car. One of my most financially savvy friends drives a brand new car, one that she paid for with cash, and I don’t judge her for that decision. Buying a brand new car is not a personal finance sin and it doesn’t make you financially unwise if you do so, it’s just not a choice I choose to make for myself, because I choose to spend my money on things that align with my values, none of which involve what I’m driving around to haul my groceries.
Here are five reasons it’s not worth it, in my opinion, to buy a brand new car.
1. No one really cares what you’re driving.
A car’s sole purpose is to get you from point A to point B. It’s not a status symbol, it does not define who you are or your amount of success, and it is not part of your identity, so let that go. Everyone is too worried about their own lives to worry about what you’re driving anyway.
2. That new car smell is toxic.
Literally. According to CBS News, that new car smell comes from a mixture of chemicals from the adhesives, plastics, and formaldehyde (a known carcinogen) used in the manufacturing process of automobiles. Thanks to VOCs and offgassing, there’s a good reason I’m actually nauseated by that new car smell.
3. It’s not worth the debt…
Just because everyone else is getting into debt for their new cars, doesn’t mean you should, too. It may be “normal,” but it doesn’t have to be your normal. It is never wise to go into debt for a depreciating asset. If you can’t pay cash for the car, then you can’t afford the car.
If you’re not sure how to even begin saving up the amount of money you’ll need for your car (whether it’s brand new or just new to you), opening a savings account at an online bank like Synchrony, that is paying at least 1.55%, can help you get there faster by giving you a little bit back as your money sits there.
If you’re not sure how much you should be saving towards your new goal of paying for a car in cash, free tools like Personal Capital can help you track expenses and see where your money is going, so you’ll know on an ongoing basis, how much you can wisely afford to sock away for your car purchase.
4. Or the cash you pay for it.
Now that I’m gaining momentum in my savings account after paying off all my debts, realizing how long it takes me to actually save up $30,000 or $40,000 makes me absolutely not want to go blow it to pay cash for a brand new car.
Think about it. It’s easy to go sign on the dotted line for five years’ worth of car loan debt, and the staggering numbers on the finance papers almost seem like they’re not real. But if you actually take the time to save up the money beforehand to pay cash for a brand new car, you’re likely to decide that the trade-off of working so many hours at your job for a new car just isn’t worth the price.
5. A new car won’t make you any happier.
Just like all the other purchases we make trying to create some lifestyle ideal that we crave, a new car will not make us any happier. Don’t buy a brand new car just because you feel entitled to a new car (thanks to lifestyle creep) or because you’re trying to impress someone, like your neighbors or co-workers. Ask yourself the real reasons you want to buy a new car, and if it’s worth indebting yourself to your job for that much longer, and hopefully you’ll make the right decision.
Is It Really Worth All That Time and Money?
Although I would never advise anyone to purchase a brand new car, the desire to own a new car is a personal choice in how you spend your money. If you’ve saved up and can afford to pay cash for the latest model car, and that’s really what you want to spend your money on, then great. Spend your money on what you want. But if you have to finance a new car just to keep up with the lifestyle you’ve created for yourself, or to impress those around you and fish for compliments, is it really worth it? I think the answer is pretty obvious.
Additional resource: If you’re looking for a simple way to stay on top of all your finances so as to know whether or not you’re financially ready to buy a car, house or any other major purchase then check out my favorite tool – Personal Capital. Completely free, it allows you to track your spending, monitor your bank and investment accounts and watch your net worth grow plus many other tools.
Do you own a brand new car today? If so, how do you feel about your past decision? Would you do it again? Have you purchased a new car in the past and regretted it (or not regretted it?)