10 Biggest Reasons Why You Should Never Buy A New Car

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Curious about causes to by no means purchase a brand new automobile?

It might be powerful to face.

Do you actually love that new automobile scent?  Well now you possibly can purchase it in a bottle.

And that’s a great factor, as a result of you most likely ought to by no means purchase a brand new automobile.

You know they’re costly. 

Still, when you’re making sufficient cash doesn’t it make sense to purchase a brand new automobile? 

Maybe as a private alternative, however not as a monetary transfer.

In truth, when Thomas J. Stanley and William D. Danko researched their guide “The Millionaire Next Door” they discovered that greater than 20% of millionaires purchase used vehicles. 

Interesting truth, eh?

For some rich people this is only one extra of the many good cash strikes that assist them construct and protect their wealth.

Have you heard new automobile loses its worth immediately if you drive it off the lot?

There’s really some fact to that.

Reasons To Never Buy A Brand New Car

CarFax says that vehicles can lose greater than 10% of their worth through the first month after you drive it off the lot!

Of course, a richer particular person may purchase a three-year-old Bentley or lightly-used Ferrari as an alternative of the used Ford minivan my spouse and I purchased a number of years in the past, however the reasoning is identical. 

In order to steer you clear away from shopping for a brand new automobile, listed below are 10 the explanation why it is best to by no means purchase a brand new automobile.

1. New Cars Cost More

No shock right here, and we aren’t speaking about sticker value alone. 

It’s the complete expenditures over time that it is best to contemplate. 

Think about it:

Dealership charges Maintenance (like oil modifications, and so forth.) And, extra

This doesn’t even contact insurance coverage, gross sales tax, and different auto purchase-related prices from the beginning.

Then, there are the automobile restore prices.

Eyebrow raised?

And that is the place we bust the parable new automobile makes monetary sense as a result of it requires fewer repairs.

You see, when evaluating the complete prices over six years (which incorporates upkeep and all of these repairs), discovered that purchasing a three-year-old automobile beat out shopping for a brand new automobile by hundreds of .

Saving cash is the only greatest motive to purchase a used automobile. 

Who couldn’t use a number of thousand further? 

So a lot of the remainder of this record particulars the the explanation why you save a lot if you purchase used or “pre-owned,” because the salesperson will say.

And earlier than you get tempted by the concept driving a brand new automobile in some way supplies you with a unique, higher expertise than a used one, contemplate this: 

Even should you begin new, aren’t you driving a used automobile when you’ve pushed it some time?

By the best way, once we purchased our van we paid about $eight,000, which was $15,000 lower than an identical new mannequin would have price. 

And no, we’ve got not spent anyplace close to that a lot on repairs.

2. You Pay More Interest

How a lot will you save when shopping for a used automobile? 

That relies upon partly on whether or not you pay money or finance the automobile. 

Interest charges are usually decrease for brand new automobile loans, so that you may suppose that’s a motive to purchase new. 

But since you normally borrow considerably more cash for a brand new automobile, you usually pay extra in complete curiosity fees than should you purchase a used automobile.

Use an auto mortgage calculator to check prices for particular mortgage quantities.

If you pay money you get rid of all curiosity prices. 

That’s what we did once we purchased our van. 

And for many of us, saving up sufficient cash for a pleasant used automobile might be extra sensible than saving as much as pay money for a brand-new automobile.

three. New Cars Depreciate Faster

Still asking your self if you should purchase new or used?

At some level you’ll need to commerce in or promote your automobile, and that’s if you’ll understand how a lot worth your automobile has misplaced. 

When did their comparisons, they calculated the remaining worth of every automobile on the finish of six years. 

Not surprisingly, depreciation is bigger with new vehicles — a giant a part of the additional price.

According to, a brand new automobile loses about 20% in worth the primary 12 months, and a few vehicles can lose as much as 50%. 

On common the depreciation is 60% for the primary 5 years.

Depreciation does sluggish because the years go by, however in any case, should you purchase a less expensive used automobile there may be much less complete worth to be misplaced. 

A $30,000 new automobile will most likely depreciate at the least $6,000 the primary 12 months in response to, and presumably as a lot as $15,000. 

In both case, that’s greater than the depreciation our $eight,000 minivan has suffered in your entire three years we’ve had it.

Four. You Pay Higher Taxes and Licensing Fees

Most states have gross sales taxes and registration charges for any automobile buy. 

These might be considerably increased for brand new vehicles versus used, due to the value distinction.

It’s straightforward sufficient to know the upper gross sales tax. 

Whatever the speed is, should you pay twice as a lot for a brand new automobile versus a used one you’ll sometimes pay twice as a lot in sale’s tax. 

But most states additionally base registration charges on the automobile worth.

For instance, should you reside in Santa Monica, California and you purchase a brand new automobile for $25,000, your complete taxes and registration will price you $2,515, in response to the DMV registration payment calculator

A used automobile purchased for $12,000 will price you $1,241. 

That’s nonetheless quite a bit, but it surely’s a financial savings of $1,274 (to not point out the $13,000 you saved on the sticker value).

5. You’ll Pay Higher Insurance Rates

Normally used vehicles are cheaper to insure than new vehicles, as a result of the insured worth is decrease. 

Allstate insurance coverage says you’ll save a mean of $756 yearly when shopping for a used automobile.

Of course the mannequin issues too. 

Some vehicles are simply plain costly to insure, whether or not new or used. 

So to save lots of much more cash take a great have a look at an inventory of the least and most costly vehicles to insure earlier than you buy groceries.

6. You Have to Fully Insure New Cars

There is one other strategy to decrease insurance coverage premiums on a used automobile. 

It has to do with the truth that you may have the ability to save sufficient to pay money for a less expensive used automobile, however not a dearer new one, and that leaves you with an extra money-saving insurance coverage possibility.

You see, if you borrow to purchase a automobile, lenders require collision protection.

But if you purchase a automobile for money (and should you can afford a attainable loss within the case of an accident), you possibly can drop the collision protection altogether and pay a lot decrease premiums in consequence.

We don’t carry collision protection on our van, saving us tons of of yearly. 

Without a lender to dictate what sort of protection we’ve got to purchase, we’re additionally free to go for decrease legal responsibility limits to decrease our premiums additional (I’m not recommending this, but it surely is an possibility).

7. A New Car Limits Your Choices

Let’s suppose it’s important to maintain your automobile buy beneath $20,000. 

In that case you possibly can’t purchase a brand new Mercedes-Benz C-Class, as a result of they begin at simply over $41,000 earlier than you add choices. 

In truth, there aren’t many new vehicles you should buy for lower than $20,000.

Fortunately, by taking a look at used vehicles, your choices open up instantly. 

In truth, if you want a Mercedes Benz C-Class, however can’t afford a brand new one, contemplate a 2009 mannequin. 

It makes the record of essentially the most luxurious used vehicles you should buy for beneath $20,000.

Or contemplate this author’s instance. 

My spouse and I may have purchased a brand new automobile, however we might by no means go into debt to purchase a depreciating asset, so with our money we might have been caught with a brand new however small automobile that couldn’t be used for tenting or carrying furnishings. 

Instead we purchased precisely what labored greatest for our wants.

In different phrases, shopping for used means that you can improve the form of vehicles you purchase, supplying you with many extra choices no matter how a lot it’s important to spend.

eight. You Worry More When You Buy New

When I lived in Colorado I typically noticed drivers of newer Four-wheel-drive vans avoiding scenic mountain roads as a result of they frightened a couple of scratch or two. 

That’s simply unhappy. 

What’s the purpose of getting Four-wheel-drive should you can’t have any enjoyable with it?

Meanwhile I let the branches rub towards our van on these slender grime roads with out concern. 

The new scratches simply blended in with the previous.

Let’s face it; when you’ve gotten one thing new and ideal you’re frightened about any little factor that may injury it, proper? 

With a brand new automobile you may additionally fear extra concerning the subsequent merchandise on our record…

9. New Cars May Be Targeted By Thieves

Not all new vehicles are at extra danger of being stolen. 

But it’s a protected wager that our ten-year-old minivan isn’t on the prime of any automobile thief’s to-do record.

Of course the chance of being stolen additionally is dependent upon the situation of the automobile and what kind it’s. 

A record of the most-stolen autos will let you know which fashions are almost certainly to be focused by thieves. 

Consider shopping for less-desired autos should you reside in a high-crime space.

10. Used Cars Can Be More Reliable

This will appear counter-intuitive. How can used vehicles be extra dependable than new ones? 

It has to do with the truth that some automobile fashions are simply higher from day one, however you possibly can’t know that till they’ve been round some time. 

Let me clarify additional…

The quantity and severity of mechanical and different issues varies by mannequin.

And should you have a look at the scores in Consumers Reports’ Used Car Buying Guide you’ll discover that even the reliability of the identical mannequin can turn out to be a lot worse from one 12 months to the following.

The necessary level is that as a result of they’re primarily based on actual homeowners’ reviews, these scores turn out to be extra significant and correct after a variety of years

Look at that information and at a look you possibly can see the rows of black marks that let you know to keep away from sure vehicles.

In different phrases, with the assistance of a information like this you possibly can select a used automobile that’s confirmed to be dependable, as an alternative of taking your probabilities with a brand new automobile.

By the best way, should you don’t subscribe to Consumer’s Reports, you could find their automobile shopping for guides in most native libraries. 

They record vehicles by mannequin title and 12 months, with scores for every little thing from brakes and electrical programs to color high quality.

Advantages and Disadvantages of Buying a New Car


Low financing charges Factory guarantee New earlier homeowners Known automobile historical past (just about none because it’s new) Limited decisions Possibly extra focused by thieves Higher price normally


More costly Quick depreciation Insurance prices Higher tax and different prices

How to Avoid Buyers Remorse When Buying a Car

Nothing is worse than having patrons regret if you make one of many largest purchases you’ll make in your life.

How are you able to keep away from this?

Educate your self.

Keep in thoughts the recommendation we shared on this article and know that finally, the selection is yours to make.

Is It Better To Buy A New Or Used Car?

If you resolve to purchase a used automobile as an alternative of a brand new one, do a little analysis. 

We simply shared 10 actual causes to by no means purchase a brand new automobile.

Let’s recap…

New vehicles price extra You pay extra curiosity New vehicles depreciate quicker Higher taxes and registration charges Higher insurance coverage charges You have to totally insure new vehicles A new automobile limits your decisions You fear extra if you purchase new New vehicles could also be focused by thieves Used vehicles might be extra dependable

And this doesn’t even cowl adverse fairness.

Do anybody who has been hit arduous by adverse fairness?

This means the worth of your automobile is lower than your stability.

How does this impression you?

First, should you occur to get right into a automobile accident and your automobile is deemed a complete loss, you would find yourself in a foul spot.

For instance, in case your Ford Explorer is valued at $20,000 and also you owe $25,000, you’ve gotten $5,000 in adverse fairness.

Because insurers sometimes give you a settlement equal to the automobile’s worth, you’ll be left with $5,000 on the auto mortgage.

How do you suppose it is going to really feel to pay for a automobile that you just don’t have?


Plus, finance firms not often re-amortize your mortgage on a decrease stability attributable to a complete loss.

You’ll be left paying your full automobile fee for a automobile that you just now not personal.

Or, should you go to commerce in your automobile with adverse fairness, dealerships sometimes roll the surplus (or $5,000 on this instance) onto your new automobile buy however, typically relying on the quantity you’re adverse, they’ll’t!

So, should you’re making an attempt to improve your sedan to an SUV or minivan in your rising household, you is likely to be caught as a result of the dealership gained’t take in the adverse fairness in your trade-in automobile.

This means you go into the acquisition with immediate adverse fairness.

While this could occur with new and used autos, it’s extra probably with newer autos that depreciate so quick.

Consider this if you make your automobile buy choice.

Consumers Reports, along with the scores of their used automobile shopping for information, has free on-line assets on tips on how to keep away from shopping for a lemon and used vehicles to keep away from

You can even purchase a report on a automobile’s historical past from a web-based service like

Will your subsequent automobile be new or used? Tell us your reasoning within the feedback under!

10 Biggest Reasons Why You Should Never Buy A New Car 2

Steve Gillman



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