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Nothing Financially Wrong with Buying A New Car

I bought a new car this week.  Not just any new car but a crossover SUV.  Today I want to discuss why I still buy new cars and whether that makes me financially wasteful.

The Personal Finance Community Tends to Take a Negative View on Buying a New Car

I have been part of the personal finance community for years.  In the community topics tend to go in cycles, resurfacing every few years for a spate of different blogger takes.  Each one has a different perspective, which makes them worth reading.  But I digress.  There is one particular one that comes up every year that really kind of irks me.

You know the one.  The holier then thou sell your car and drive a bike everywhere post.    The, “you are wasting your money on cars” while I’ve saved tens of thousands while riding my bike.  Workout and money savings in one package.

Not Everyone Can Ride a Bike to Work

Now, this is the most extreme variation and frankly the most annoying in my opinion.  That’s great that someone can ride a bike to work.  I’m sure if I lived somewhere that was possible I would.  But let’s be honest.  Very few people can afford to live close to work.  Even less have work, home, and shops all within biking distance.    The reality is being able to bike or use public transportation everywhere is a privilege not all of us have.  As such waving it in our faces like it’s some sort of metric just comes off as a bit tone deaf.

Northern Delaware Public Transportation Sucks

Take our situation.  I live in Northern Delaware on the edge of a rural and suburban area.    There is no public transportation where I am to speak of.  Could I move somewhere that has public transportation?  Perhaps, but that would result in me having to find a different employer.  Yes, you read that right.  My work is fairly inaccessible by public transportation.

Biking and Walking Won’t Work

Well, what about walking or biking?  Well, frankly the road I live on has no shoulders and blind corners.  People who ride bikes on it die about once every few years.  Not the type of place you’d want to commute from.

Moving Closer to Work is Not an Option

I could, of course, move to a place accessible by bike to work.  The only such buildings are McMansions in the neighborhood across the street from work costing about double my own. But at some point, the extra price of the home exceeds the cost of a car.  That is especially true when you still need the car to do things like getting groceries as that is not accessible from work. 

So my point is a car is the only option for those who don’t live in walkable/bikable/public transportation areas with nearby work.  From my experience, those folks are not the average.  I personally live a short 5-minute drive from work despite not being in a bikable area. I realize that even makes me privileged.

Moving Solely to be Closer to Work is Probably Not a Good Idea

I actually wouldn’t recommend someone moving just to be nearer work even it was possible. You never know when you may have to change companies. It would get expensive pretty quick to sell your house every time you change employers.

Used Car Versus a New Car

Anyway, slightly less snarky but occurring at the same time are all the posts on how you should buy used cars.  This one is a bit less privileged.  Frankly, we don’t need new cars.  Buying used in certain circumstances can save you money.  I get it.

The Average Car Buyer Should Buy Used Cars

But also I don’t follow buying used cars.  Frankly, to most of society cars are like washing machines.  Most just want one that can get them from point A to point B.  For these folks, the best car is the cheapest reliable car they can afford.

Cars as Status Symbols are a Waste of Money

There is also the car shopper looking for a status symbol.   Hey look at me I drove X.  Frankly I do agree with the PF community that buying a car as a status symbol is just throwing your money out the window.  It’s keeping up with the jones of the worst degree.

Cars as a Value or Hobby

So why do  I still buy new cars?  Because I fall into a different category of car shopper.  Someone who’s hobby is cars.  Someone who loves to drive them, work on them, and use them for various tasks.  So buying the cheapest reliable car is not going to cut it.  I need a car with a soul.

Slowly Depreciating Enthusiast Cars

Now a car that can be fun to drive may be new or used.    Honestly though, if you are truly looking for special criteria then what your buying is probably not of the type of vehicle that depreciates quickly.  The used vehicles are still in demand so the difference used to new is minimal.    Take my Corvette for example.  I sold the car for more than half of what I bought it for new 12 years ago.  There are very few vehicles you can say that about.

This slow depreciation really opens the door to a different option on car buying.  Essentially you can buy used more frequently, or buy new and hold for long periods of time.    The shortest holding period for the last 3 cars I sold was 11 years.     In some ways, I felt like 11 years was not long enough, but sometimes changing life circumstances forces your hand.    It is unlikely I could have bought a used car, held it for 11 years, and then expected it to have another 5 years of life in it for the next owner.    Why?

No Price Discount for a 2-Year Old Low Depreciation Vehicle

Because frankly the 2-year old model nearly cost as much as the brand new one.  When we cared about such things it was also noteworthy that the finance rates were higher for a used car.  In essence, it was close to a wash between buying a used car for the next 12 years and a new car that might last 16.  I choose a new car every time.  I will admit being able to do so is a privilege of being largely financial independent so I can afford the down payment.  But I’d also like to point out the difference used to new for certain cars just is not that much.

What New Car Did We Buy?

So what did we buy?  Well in light of the foster child process we needed a larger car.  Quite frankly three kids in the back of our existing Nissan Versa or Mazda 3 was like driving around in a clown car.  The oldest child had to get in without undoing his seatbelt.  So we had to get something that could seat 5 or more comfortably.  So, in this case, we bought a 7 seat Toyota Highlander.    Not exactly a sporty car, but again something that depreciates very slowly.  Buying a 2-year old Highlander would have saved me less than $4k based on the results of my new car negotiation strategy.

Why a Highlander?

Why a Highlander and not something slightly cheaper?  Well in our case we still are heading towards a plan for a travel trailer.  The Highlander we purchased can tow a travel trailer up to 5000 lbs.  It’s also getting ready to have a model change, which made the negotiation leverage heavy in our favor.  The car came loaded with safety gadgets for my family.  Lastly, the ride was the most composed and car-like of those that could tow a trailer, making it the best fit for a family whose largest car before was a Mazda 3.  In more direct words, its what I found that ticked all the requirements I needed at the lowest price.  That’s also my goal when purchasing a car, meeting my requirements (including when it comes to a sports car enjoyment) for the lowest price.

Selling The Corvette to Buy The Highlander

Now a final note lest you think I’ve opened the wallet and abandoned all fiscal sense.  To pay for said Highlander I sold the Corvette and the Nissan.  That funding made the total outlay for the new car about $8,000.  Not exactly a rounding error, but a nominal amount for a car for the next decade.  Which brings me to my final point. 

You can have almost anything you want in life, but not everything.

I had to choose between a comfortable family hauler that can also accommodate a travel trailer down the road and having my Corvette as a play car.  I chose the family hauler, which reflects my current values. That answer differs for every person.  Really the key to buying a car (or any large purchase) needs to involve understanding where the vehicle you are looking at, and the car in general, fits into your needs and wants.  Do those needs and wants top other things you would spend your money on?  Only if it tops the list should you spend your money on it.

I do feel like a bit of a sell out finally driving an SUV though…  Also the first automatic we’ve owned in 6 years…  I’ve joined the hive…

13 Comments

  1. chris
    chris July 15, 2019

    We have bought new cards for me and the Mrs but mostly because I can’t fix cars, have no interest in learning and we keep them a long time. currently a 2011, and 2013, and we will likely keep them for at least 5 more years as our daily commute is about 5 miles each way. While shopping I also looked for difference between new and used and agree with your 4K difference. I further divided that $ difference by # of miles on the used car and buying new seemed like a better deal. It can be difficult seeing jones getting a 2 or 3 different leases while we have the same car but we are playing the long game right ?

    • FullTimeFinance
      FullTimeFinance July 15, 2019

      You are not missing out much on changing cars every few years…Not compared to the bright future skipping such things provides you!

  2. Xrayvsn
    Xrayvsn July 15, 2019

    I have bought both new and used cars in my past. My current car was bought new and was the most expensive of the lot (actually more than all my other cars combined). However I did pay for it fully in cash so I felt I was able to buy this luxury at this stage in my life.

    I too like to hang on to my cars for a long time, the car prior to my main driver is still in my household and is now 15 years old and over 250k of miles.

    • FullTimeFinance
      FullTimeFinance July 15, 2019

      So far the high age for us is 14 years. We’re already discussing whether our Mazda 3 will be acceptable for my son to drive when he gets his license.. He’s 7. 😉

  3. Joe
    Joe July 15, 2019

    Congrats. I love a new car too and rarely buy used. We keep it for 10+ years so I think it worked out quite well in the past.
    Sorry to hear you let the Corvette go. You can always get something in the future so no big loss. Your family needs a bigger vehicle now.
    I’m not sure if the Highlander has a soul, though…

    • FullTimeFinance
      FullTimeFinance July 15, 2019

      Yeah, the Highlander doesn’t really have a soul, just rock-solid reliability and safety. The Mazda 3 on the other hand does. My wife honestly doesn’t concern herself with such things, so guess whose car is whose.. 😉

  4. Dan
    Dan July 15, 2019

    Bit of a bait and switch as the car in the photo is a Ferrari but you state you bought a Toyota…

    I had the same dilemma a few years ago. It’s hard to argue against a used car on a cost basis. However, as you get older, a car is not simply a device to get your from point A to point B for the least cost. For the first time, I started looking at safety features. I also looked at greenhouse emissions and MPG.

    Safety features are being added at a furious pace. That was the ultimate factor in my purchasing a new car over a 3 or 4 year old car.

    • FullTimeFinance
      FullTimeFinance July 15, 2019

      I wondered if anyone would catch that. The picture is of the inside of a Ferrari Enzo, a 600-700K dollar car at the time the picture was taken. (the car was new then). As with all pictures on this site, I took this one. The closest I got to ownership of said car is I sat in the driver’s seat for a few minutes…

  5. Chris Roane
    Chris Roane July 15, 2019

    For us, we are thinking about buying a more recent “used” car in a few years and maybe upgrading the console.

    What you posted makes sense, based on my understanding of your financial situation. But at this stage, we don’t want to deal with a car payment. But I won’t look down on anyone who buys a new car, as long as they can afford it and understand what they are doing. Your reasons seem solid to me though.

    • FullTimeFinance
      FullTimeFinance July 15, 2019

      It’s definitely very situational dependent. I’m in a situation where the finance or purchase decision is more about liquidity then anything else. But 15 years ago a used car would have probably been the better choice.

  6. Matt
    Matt July 17, 2019

    I buy new cars, but I also get employee discounts on them. My last daily driver was a Chevy Malibu, which I picked up in 2012 for $18k. Loved the car > 100k miles, but had to sell when we moved overseas.

    Now, if you had just waited one more day, you’ll see the C8 Corvette and understand what you really should have traded for!

    • FullTimeFinance
      FullTimeFinance July 18, 2019

      Haha. I am watching the new Vette information but I think it’ll be some time before it fits our life.

      Oddly enough I bought the Corvette originally via a supplier discount program.

  7. Mr. 39 Months
    Mr. 39 Months July 17, 2019

    LIke you, the line of work I am in (warehousing/logistics) doesn’t typically have homes close to where work is. I could bike, but it can also be unsafe, especially in inclement weather (I live in central NJ).

    I tried the used car route, but didn’t have a good experience. I’ve done better buying new and then driving the cars into the ground (I’ve had to leave 2 of the 3 cars I’ve owned in the tow truck yard after they met their maker). This means I’ll drive them 10-14 years and then buy new again. That way, i can make sure the maintenance is done right on them, and they last.

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