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Hidden Costs of Purchasing A Brand New Car

February 14, 2012 | Comments: 0 | Views: 144

Ahhh the smell of a new car. There's nothing quite like it. And the feeling of driving away with a brand new vehicle that no one else has ever owned is like none other. At least, that's what they tell me. I have never purchased a brand new vehicle and I don't think I ever will. There is nothing wrong with spending your money in the way you see fit to spend your money. In fact, buying new may even make financial sense depending on the tax law and other factors. I just think, generally speaking, a brand new car has hidden costs that I'd rather not incur. Below are 3 hidden costs that you may not know about.

1. According to, "a new car loses 11% of its value the moment you leave the lot." If you just purchased a car worth 30K, you lost $3,300 in value by just driving it home. During the first five years, it loses 15% - 25% of value each year. Wait a year on that same vehicle and you could potentially save $7,500. The excitement of being the first owner is not worth $7,500 or even $3,300 to me.

2. Generally speaking, newer cars are more expensive to insure than older cars. This is not a hard fast rule, but on the whole this is the case because newer parts are more expensive to replace than older parts. It's a good idea to see how much it would cost to insure the vehicle you are looking to purchase to see how much extra you'll need to pay for car insurance.

3. Buying new usually means buying on credit. While interest rates are extremely low for car loans right now, you'll still end up paying thousands of dollars more than what the car is worth. The old fashioned way of buying things - saving until you have enough money to buy cash - still has value. In fact, buying cash can save you thousands of dollars every year. Credit has its place in our economy, but if you can wait to purchase a car with cash, it will save you quite a bit of money.

While purchasing a brand new car may be exciting and fun, it may not be the most practical thing to do. Especially in tough economic times, a penny saved is a penny earned. And resisting the urge to buy new will save you plenty of pennies!

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Source: EzineArticles
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