I have committed possibly the worse personal finance crime you could ever ever make.
And these are my confessions.
I bought a new car.
Here is my Explanation:
I had the best intention to buy a used car but the problem with looking for a used car was that there were not many used cars with the colour and make that I wanted. Believe me when I say that I had tried to look for a used car. I scoured Craigslist, Autotrader, and other used car buying websites on an almost daily basis for a few months. I did find one in the colour and make that I wanted but it had already sold when I called the dealership.
Related: Buying My First Car
In addition, when I did call the dealership, the sale price of the used car that I was interested in was the same price as a new car (maybe give or take $300-$400 or so). There were some incentives for purchasing with a cash sale (note: no financing, no leasing) that yielded the same price as the used car in a newer model.
I test drove a few cars, including the Toyota Prius C. However, the Prius C is ridiculously expensive, a new car is almost $30,000 when you factor in all the taxes and the freight and PDI and everything. I did see a Prius C that was used however, the seller did not seem interested in budging much, and in British Columbia now, you have to pay full taxes on a used car purchase (since 2009) so it did not seem like that much better of a deal.
So like typical young and thrifty fashion, here is my list for pros of buying new versus pros of buying used.
Pros of Buying New
- The new car smell (I know it is terribly bad for you and is basically a concoction of chemicals, but that new car small is just so intoxicating)
- Full warranty
- Often there are deals such as low cost financing, money off incentives, low cost leasing
- New tires and brakes
- Fresh history, you know the car hasn't been into a ditch, or in an accident, or rebuilt
- More selection
- Usually, slimy sales people make less many selling a new car than they do selling a used car
Pros of Buying Used
- You're not paying for the depreciation (which is cited by Rob Carrick in the Globe and Mail as 27% off when you drive off the lot
- You won't have to deal with slimy car salespeople as much because you might be dealing with a previous owner directly
- You're reducing, re-using, and recycling!
- You can negotiate and skip the middle man (the slimy cars salespeople)
So basically, my justification (and yes, when you read a lot of personal finance blogs, you tend to note that a lot of people justify their decisions) is that I am probably going to drive this car to the ground and I will keep it around for the next 10 years, so instead of settling for a colour that I'm not fond of, I want to make sure it's something I will be really happy with. Besides, I can afford this car, I'm paying outright for it (though you could argue that I am losing a lot of opportunity cost because I could invest that money instead).
In summary, I believe cars are a huge waste of money (even though it is the second most important financial purchase you make secondary to a home with a mortgage) and I can't fathom why anyone would ever want to spend more than $30,000 on a car. I guess everyone has different values though, and some people would never ever fathom spending $5000 on a one month international trip. Which goes back to one of my favourite posts (if I do say so myself), if you had a million dollars…
Here are some tips if you are interested in buying a used car from BCAA.
Here are some tips if you are interested in buying a new car from Popular Mechanics.
Readers, do you usually buy used or do you usually buy new?