A few weeks back I was talking to my Dad about paying off my student loans. He suggested that when I am paid off I should use the money I was putting into my loans to save up for a new car. It got me thinking about whether a new car or a used car is a better option.
Cost is the first thing that comes to mind when deciding between a new car and a used car. A new car costs a lot more, and the biggest loss in value comes the moment you drive it off the lot. Cars are depreciating assets and lose value over time.
There are other important costs too. Taxes and registration on a new car is significantly more expensive than a used car, as the registration cost is based on the value of the car. Insurance will also cost more on a newer, more valuable car than a used car.
Where New Cars are Cheaper
If you have ever owned a new Toyota and an old Volvo, you know that maintenance makes a big difference in the cost of owning a car. I used to have brake work and all sorts of maintenance when I drove a 20 year old Volvo. It was in the shop frequently and the repairs were not cheap.
Since I owned a new Toyota, I have never had a repair that was not scheduled maintenance. I had to replace the tires at 50,000 miles, get my anti-freeze flushed after a few years, and get my oil change every 5,000 miles. That’s it. No other costs, no other repairs.
I also get much better fuel efficiency in the new car. My old 1990 Volvo 740 is rated at 18 MPG city and 20 MPG highway. My 2008 Corolla gets 26 MPG city and 35 MPG highway. Working 22 miles from home, the savings adds up quick.
This is a place where you have to decide the value yourself. I have really enjoyed owning a new car. I keep my car nice and clean and it is a pleasure to drive around. I often avoided driving and tried to get a ride with a friend when I had a 1987 Plymouth Horizon in high school and the Volvo in college. Now I don’t mind driving.
I am proud of my car. I am happy to drive it. I am comfortable while using it. And, with a 45 minute commute each way, being comfortable in the car is important.
What to Buy?
I am usually a big advocate of saving money where you can. Some people say that a car just gets you from point A to point B. That is true, but I like to get there comfortably. I am not saying that I am going to go buy a new sports car or luxury car, but I am not against the idea of buying a new car if it is practical.
Like everything else in life, only spend money where you get value. I get value from a new car, but only if it is going to be reliable, comfortable, easy to maintain, and fuel efficient. That is why I will probably get another Toyota (or maybe a Honda) for my next car. I don’t need anything flashy, I need something quality.
Your Thoughts and Experiences
Would you rather get a new car or a used car? Do you think it is worth the extra money? Please share your thoughts and experiences in the comments.
Image by .Larry Page