When it makes sense to buy a new car

Written by Miranda Marquit on January 17, 2014

newcars

There are certain rules that, as a personal finance writer, you are expected to follow at all times. One of those rules is that you should never, ever, under any circumstance, buy a new car.

A couple of years ago, I broke that rule.

As with all rules of thumb, the prohibition on buying a new car should be based on individual circumstances and situations. When I went through the car-shopping process, I realized that a new car was the answer for me. I even financed my new car (another no-no).

The Advantages of Buying a New Car

There are certain advantages that come with buying a new car, as long as you do it right. Here are some of the advantages of a new car:

  • A reliable vehicle, less prone to breakdowns. In many cases, you have a manufacturers warranty to cover the first few years of ownership.
  • You can get exactly what you want, without settling.
  • In some cases, dealer and manufacturer incentives mean a lower price than some late-model used versions if you are willing to finance.
  • If you have good credit, you can get a low rate when you finance, allowing you to put your money to other uses.

A new car works for me because I tend to drive my vehicles to the ground. I kept my last car, a lease return, for about nine years. I plan to keep my current car for at least that long. There’s a good chance that it will become my son’s primary vehicle when he is old enough to drive.

My new car has everything I want, and when I bought it, the dealer and manufacturer incentives meant that we paid about $3,000 less for it than the late-model lease return I was looking at. That’s right: My brand new car cost less than a used car that was almost two years old. I got everything I wanted in this car -- and it came with that new car smell.

Finally, I decided to finance because the rates were so low at the time. I had good credit, so I got the best rate, which is below 2%. Instead of tying up all that cash and essentially “earning” 2% annually, I can invest that money. With my investment earnings in the last two years, I’ve got a return on track to beat that. I’m investing the money I would have used to pay for a car, and doing better with it.

Of course, this strategy isn’t for everyone. However, if the conditions are right for you, financing a new car can be a good financial move.

Posted Under: Auto Loans
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About Miranda Marquit

Miranda is a freelance writer and professional blogger specializing in financial topics. Her work has appeared in numerous media, online and offline. Her blog is Planting Money Seeds.


Jan17

newcars

There are certain rules that, as a personal finance writer, you are expected to follow at all times. One of those rules is that you should never, ever, under any circumstance, buy a new car.

A couple of years ago, I broke that rule.

As with all rules of thumb, the prohibition on buying a new car should be based on individual circumstances and situations. When I went through the car-shopping process, I realized that a new car was the answer for me. I even financed my new car (another no-no).

The Advantages of Buying a New Car

There are certain advantages that come with buying a new car, as long as you do it right. Here are some of the advantages of a new car:

  • A reliable vehicle, less prone to breakdowns. In many cases, you have a manufacturers warranty to cover the first few years of ownership.
  • You can get exactly what you want, without settling.
  • In some cases, dealer and manufacturer incentives mean a lower price than some late-model used versions if you are willing to finance.
  • If you have good credit, you can get a low rate when you finance, allowing you to put your money to other uses.

A new car works for me because I tend to drive my vehicles to the ground. I kept my last car, a lease return, for about nine years. I plan to keep my current car for at least that long. There’s a good chance that it will become my son’s primary vehicle when he is old enough to drive.

My new car has everything I want, and when I bought it, the dealer and manufacturer incentives meant that we paid about $3,000 less for it than the late-model lease return I was looking at. That’s right: My brand new car cost less than a used car that was almost two years old. I got everything I wanted in this car -- and it came with that new car smell.

Finally, I decided to finance because the rates were so low at the time. I had good credit, so I got the best rate, which is below 2%. Instead of tying up all that cash and essentially “earning” 2% annually, I can invest that money. With my investment earnings in the last two years, I’ve got a return on track to beat that. I’m investing the money I would have used to pay for a car, and doing better with it.

Of course, this strategy isn’t for everyone. However, if the conditions are right for you, financing a new car can be a good financial move.

About Miranda Marquit
Miranda is a freelance writer and professional blogger specializing in financial topics. Her work has appeared in numerous media, online and offline. Her blog is Planting Money Seeds.