Worse Purchase

If you are over 21 and have purchased anything, you will discover that there are certain things that are terrible investments.  I would like to suggest that the worse thing you can purchase is a new car.  “What,”  you say?  “I have to have a car.”

While is it true, we must have transportation, it is equally true that cars lose value faster than buying a herd of goats with no place to put them.  On average, the value of a new car drops by up to 50% within two years.  If you buy a $50,000 car you will own a $25,000 car in two years and you will have spent $12,500 per year or about $1,000 per month for your new ride.  This is in addition to insurance, gas, oil, tires and interest you pay if you finance.  Such a vehicle could be costing your $1,500 or more per month.  Can you afford that?

There’s only one alternative.  Buying a used car, which is also the sensible approach.  First, you won’t take the big loss in value within such a short time.  Yes, your used car will also lose value.  But, typically not as fast.  The trick is to find a good clean used car, still under warranty.  And, it may not have all the features you want or it may not be the color you want.

Buying a new car is a big hassle.  Buying a used car worth buying can be more of a hassle.  It’s up to you  to do a lot of research.

Of course if you are wealthy, and few of us are, you can be up with all the latest and greatest.  Just remember, when you make those $500 monthly payments or more, you are losing up to double that amount in depreciation. 

All of this said, the number one reason not to buy a new car is, “It’s cute.”  Puppies are cute but the average cost to own one is about $500 per month, including vet bills, etc.

Oh well, most of the time you don’t have to clean up after a new car.

PMO
©2016