12 Reasons to Think Twice Before Buying a New Car

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Having the perfect car is a lifelong dream for most adults. As a country, the USA has one of the highest numbers of personal and commercial vehicles. Yet, buying a brand-new car may only sometimes be ideal for some.

On the other hand, buying a used car has several upsides. We looked at Investopedia, GoBankingRates, and Lifehacker to weigh our options between buying a new car and an old one. Here are the topmost reasons to avoid buying a brand-new car.

Higher Costs of New Cars

Buying a new car in the USA averages around $47,000. This large expense can limit your finances. It’s especially tough for young workers and retirees who are already budgeting carefully.  Buying a new car puts unnecessary pressure on them. For daily travel, a cheaper, used car is a practical option. According to TheStreet, only 22% of Americans have the luxury to afford a new car.

Rapid Depreciation of New Cars

There is no doubt that the value of a new car starts decreasing right from the moment of purchase. According to reports, a car’s value decreases to 81% of the original price in the first year of purchase. The price is no more than 69% of the original purchase value by the second year. Over time, you end up spending more on the car than you could ever sell it for.

High-Interest Rates

Many people follow the 20/4/10 rule when buying a new car and put only 20% as a down payment. Unfortunately, interest rates are very high nowadays, so you end up paying much more than the actual price. Even if you get a reduced price during sales, the high interest will eventually make you pay more.

Higher Registration and Taxes

Every state in the United States of America has different car registration rates. New cars typically incur higher registration fees and taxes than used cars. You might get a great offer on a brand-new car. Yet, these additional expenses can further inflate the total cost of ownership over time.

High Maintenance Rates

Having a new car comes with a lot of hassles. Every dent or scratch will only reduce the resale price of your car. Automotive News (AAA) reports that maintaining a new car costs around $1475 annually. This high maintenance cost is only affordable for a small population.

High Insurance Rates

Insurance rates for new cars are usually higher than those for used cars. This is mainly because of their worth. The cost of repairing or replacing parts for a new car is much more than for a used car. So, insurance companies set the premium rates for new and old cars differently. The average insurance rate for new cars can exceed $2000. 

Limited Options for New Cars

When buying a new car, you only have the opportunity to go for a limited number of models in your budget range. Naturally, this restriction will not allow you to enjoy all available features and configurations in a car. You should go for a used car if you are on a budget. You will have a broader range of options for used cars from different model years.

Issue of Outdated Technology

Car technology is evolving rapidly. Buying a new car means you get the latest features. Eventually, your car might become outdated. If that happens, your price on the brand-new model will not be worth it. On the other hand, a used car with slightly older technology will cost you much less.

Reliability Issues of New Car Models

Be it cars, phones, or any other gadgets, it is wise to check some reviews first. Brand-new models may have undiscovered design flaws or mechanical issues. Without proper customer reviews, you can never be sure of the longevity of your car. Used cars can give you more reliability.

Availability of CPO Options

Thus, buying Certified Pre-Owned (CPO) vehicles is a better option. CPO cars offer many benefits of a new car, including warranty coverage and roadside assistance. They are almost as new as new cars. CPO cars can cost a little more than non-certified used cars, but you will be making an environmentally friendly choice.

Overproduction and Waste

The automotive industry produces millions of new vehicles each year. This can lead to environmental issues such as resource depletion, pollution, and waste. If more people start using used cars, there will be fewer demands for producing such vast numbers of cars. This could help the environment to a great extent.

Anika is a CPA and founder of What Anika Says. She shares simple and actionable frugal living, money management and money-saving tips to live a debt-free financially independent life. She has been featured on popular websites like Bankrate, Forbes, Mint ,and Authority Magazine. Byline: MSN