Buying a new car is very tempting if we rely on the many advertisements we are fed every day on television. The low interest rates and the down payments are, in fact, so attractive, that at first glance you would think that it is really a very good deal. Does that mean you actually had to go out and buy yourself a new vehicle? Absolutely not. The reason? Regardless of the kind of deal on the table, such an acquisition is never worth its weight in gold and we will tell you why.
Unfortunately, the fact is that new cars lose almost 60% of their value in the first five years of their life. Indeed, you lose nearly 9% of the value of this acquisition, from the first minute of driving. In most cities, cars are a necessity for work and daily life, but it’s important to remember that they are a commodity, not an investment.
Do you think people would buy houses or stocks on the stock market if they lost 9% of their original value ten minutes after the trade closed? No, they wouldn’t. This is why you must be financially solvent if you plan to buy a new car. If you’re buying a four-year-old used sedan, the previous owner has probably already written off the initial cost for you; which means you save money (provided you don’t carry out extravagant repairs).
The universal rule with monthly payments is, it doesn’t mean you should have them, just because you can afford them. I’ve seen countless friends buy sports cars new after getting their first job, even though their new budgets couldn’t accommodate such a heavy item.
The result? Extensive use of credit cards to fund other aspects of their new lifestyle. Buying a second-hand vehicle means lower monthly payments, or sometimes even no monthly payments at all. Which means more money in your pocket each month for other things, including saving money and paying off your debts.
You may not know it, but auto insurance costs more when you have a new vehicle. Why does it cost more to insure a new vehicle? Quite simply, because the cost to replace them is greater.
In the event of an accident, it costs insurance companies more to replace a new car than a used vehicle. Many people don’t realize that in order to finance the purchase of a new car, you will need to be fully covered by your bank. Comprehensive insurance is essential if you want your bank to fully cover the transaction.
I have sometimes seen new 4×4 drivers avoid mountain roads because they were worried about a scratch or two. It’s sad. What’s the point of having a 4-wheel drive if you can’t afford some adrenaline? A used car driver doesn’t have that kind of worry because his car is already scratched anyway. Let’s face it; when you have something new and perfect, you worry about the tiny thing that might damage it, right? I’m not even talking about thieves and other marauders who make a point of targeting new cars.
Despite the disadvantages of the new car, you still want to buy one. Know that there are some tricks to know. Here are some solutions to know
You should also know that manufacturers such as BMW, Peugeot, Renault, Volkswagen, etc. most often offer their own financing solutions. They offer their customers promotional offers (insurance coverage, maintenance costs, etc.) with very attractive payment options.