Let’s take a look at one of the most expensive purchase that most people make after their first year of working as an employee. The wildest purchase for most people is in their transportation cost. If you already have a car that works well, there is no point in buying a brand new, high value car to boost your “Social status”.
What is the cost of buying a new car? The moment you take your new car for delivery and drive it out of the garage you already lose around 5% on the initial purchase price. After the first year this increases to a total of +- 20-30%, within the first five years your car has lost around 60% of it’s value. In these numbers lies a interesting solution to this money loss. If you see that more than half of the money has been lost in the first five years, why don’t you buy a car with a previous owner who has lost half of the value of the car?
A new car is not going to change your car – Monica Ali
Buying a new car isn’t changing your life, at least not for the better. People will look at you different if you arrive in a brand new car vs your older car. But before you decide to go for it think about how this only makes you feel a bit better at the cost of half a car. People wont look strange at you when you arrive in a 8 year or older car, they will only notice your new car the first times they see you. After that it settles down and you remain with a heavy loan or a immense cut in your budget.
When you are buying an older car there is nearly always more costs in the years you own it compared to a new car. However if you consider the huge difference in price this is more than reasonable. An extremely neglected area of car expensive is covering for potential losses with a full insurance policy. Not having to pay for a full insurance can open up the chance for you to buy a second hand car every few years. This can settle the risk for buying a troublesome second hand car.
Buying a new car without a good insurance policy is really dangerous, you can total your car a week after purchase and not receive anything back. In comparison buying a cheaper car doesn’t require a large insurance cost.