Breaking Financial Myths: Why I Bought a Brand New Car, And Would Do It Again

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Breaking Financial Myths is a series of blog posts written by top Personal Finance bloggers that aim to challenge the oft repeated yet seldom understood personal finance concepts. So, come on over, join the conversation, and let us know how you are a newer person because of it.

Continuing the series is Sarah at Smile & Conquer,  another fierce financecista from Canada who understands that there is an definitely an opportunity to shake the so called “norms” and do it in the most productive and common-sense way. I am so happy to have her guest post on this series.


Hey all! I’m Sarah from over at Smile & Conquer and I’m here today to pitch in with another ‘against the norm’ post. First off, a big thanks to Dirt Cheap Wealth for putting this together and including me!
I’m going to be talking about cars. Not exactly a topic that is near and dear to my heart, but it’s got a money spin, so that brings it all home for me. Just about every money expert out there is of the impression that buying a new car is about the worst thing you can do and that you should ALWAYS buy used and then drive it into the ground. You’ve probably already guessed from the title of this post that I’m going against the grain on this one.
I’m 31 and have only had two cars in my life. The first was a 1998 Pontiac Sunfire that my parents bought for me after I graduated high school. I loved that car to bits (I know, I know…could I be any more typical than an 18-year-old girl who drives a Sunfire), and I really did drive that car into the ground. It did me well; took me across the whole country and back, went way too many months without a wash, and was forced to listen to more Avril Lavigne than anyone should. When Sunny finally bit the bullet, I decided it was time for a sparkly, brand new car…I deserved it right? At that time in my life, I wasn’t exactly as financially savvy as I am now, but you know what? I don’t regret buying new one bit.
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5 Reasons Why Buying A New Car Is Actually The Best

1. Low Financing Rates
Car dealerships will almost always offer you significantly better interest rates for financing than you’ll get if you take out a loan at your bank or through another lender. When I bought my car, I got 0% financing for five years. Yup, no interest for five whole years. That was a huge deal. Even with my limited financial knowledge at the time, I knew that paying interest was bad news. This isn’t even that rare; you’ve likely often heard commercials advertising 0% or 0.9% financing for new cars, especially in the Fall when dealerships are trying to get rid of that year’s models.
Such a low (or zero) finance rate means that you can get into a car with very little down and still not worry about paying interest. Sure, you can buy a used car with cash and not worry about interest, but that’s not always in the books. Not many people have enough money kicking around to pay cash for a car (even a used one). I didn’t put down a dollar when I bought. I negotiated for some trade-in value for my falling apart Sunfire and used that, but could have even gone with $0 down.

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2. Reliability
One of the biggest perks of having a new car is not having to worry about unexpected repair bills and pricey maintenance fees. Even if something does go wrong, you’re likely covered by warranty and won’t have to clear out your emergency fund to fix your old beater. I liked the consistency of having a car payment as opposed to paying nothing towards my car for five months, and then all of a sudden being faced with a $2,500 repair. Yes, you’ll still have to get the normal oil changes and maintenance, but it should be awhile before you face a big bill.
The peace of mind that comes with knowing your car is reliable and is going to get you to work on even the coldest, snowiest mornings is a big deal. Before upgrading, I would always have a moment of worry every time I turned the key in the ignition of old sunny on a cold day…worried it wasn’t going to start up. Eliminating that stress is worth dollar bills for me!
3. Get the options you want
When you’re buying a used car, there’s no chance to negotiate on what options you do or do not want. With a new car, you can downgrade or upgrade until your heart’s content, and find something that fits both your lifestyle and your budget. Maybe you can drive stick…that will automatically save you a thousand dollars when buying a car, or you think you can get away without air conditioning or power windows
4. Fuel Efficiency
New cars have come a long way in regards to fuel efficiency, so buying a new model will save you money on gas for as long as you own the car. This wasn’t as big an issue for me because I don’t drive that much (my current car is seven years old and has less than 70,000 km’s), but for those of you who drive a lot then this really can add up.
5. Pride (or ego)
I know some of you aren’t at all superficial and feel zero embarrassment about driving an old clunker, but I’m not that person. I like nice things! And even though I don’t spend a lot of time driving, I still like to be comfortable in my car and not embarrassed by it.
There’s just something nice about climbing into a car that no one else has owned before. I don’t even like that new car smell, but it’s certainly better than some other smells that can come along for the ride when you buy used. This happened to my partner. He bought a second-hand Jeep a few years ago, and it was almost perfect….low mileage, excellent condition, well maintained; but the owner was a smoker, and it took us FOREVER (and cost $) to get the stink out.

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Call me crazy if you like, but there is a certain amount of pride to owning a new car!
So, that’s my reasoning on why it’s really not such a bad thing to buy new, and might work out better for you. And I didn’t even mention not having to deal with a creepy used-car salesman (because clearly, new-car salesman are much classier).
To wrap-up, I’ve also got a few tips for you to get the best possible deal if you are considering a new vehicle. Just because you’re spending more doesn’t mean you don’t still want to get the best possible deal.
  • – Buy late in the year – dealerships want to clear out the current year’s models to make room for the new ones and so you’ll find the very best prices and best financing offers if you shop in October or November. Don’t leave it right until the end of the year because you won’t have such a good selection. Going near month end can also help because dealerships have quotas they need to hit each month. If they’re running behind then, they’ll likely be even more willing to work with you.
  • – Be a tough negotiator – some people are better at this than other, so if it’s not your forte then take someone along with you who is a pro. You don’t have to stop at just the price; you can also negotiate on the value of your trade in, additional options, and maintenance package. For my car, I got free oil changes for life. Usually, I get an oil change twice a year and let’s assume it would cost about $50 each time…that’s $700 I’ve saved, and I’m not planning to get rid of my car anytime soon. If you live in a place that has more than one of the same dealership, then it can often work in your favour to visit both and pit them against each other.
  • – Do your research and use the internet to your advantage – it’s so much easier nowadays to find information on specific cars and find out what prices other people are getting. More and more dealerships are also doing business online so you can quickly and easily get quotes online and then negotiate without even stepping foot in a dealership. For people who don’t like negotiating in person, you might find it much easier to do it over email.
What are your thoughts on buying new versus used? Do you have any additional tips for getting the best deal on a car?
Sarah
Smile & Conquer

7 Replies to “Breaking Financial Myths: Why I Bought a Brand New Car, And Would Do It Again”

  1. Praise be, that car-buying advice at the end is spot-on. First time I learned to buy late in the year and late in the month was a revelation! Lovely work as always, darling.

    1. Thank you so much, my dear!!

  2. You lost me from the start, in my opinion if someone can’t buy a car with cash they can’t afford that car. I’m not opposed to a zero interest loan but only if they have the money in savings and want to invest it to earn the spread. The difference in reliability is minor and if it does inconvenience someone, well call that adulting, it can be an educational adventure making due with less.
    We all like nice things, like an emergency fund for instance. And mileage is small money. I think that my FIRE lifestyle of working one, sometimes two days a week for fun only, cause I don’t need the income, not setting an alarm clock and doing exactly what I want to do every single day is due in no small part to minimizing the black hole money suck that cars can be.

    1. Steveark – thank you so much for stopping by! Every person has a starting point, and based on that we make financial decisions. The purpose of this was to see if you could make wise decision even with purchasing a brand new car without getting in debt.

  3. You have provided all valid points for buying a new car. My wife bought a brand new car and I bought a 1-year old certified used. We need our cars to commute to our jobs. We also keep cars for 10-12 years and put over 200k miles on them. New or almost new works for us.

    1. I am glad you find the post useful.

  4. My family owns three cars, the first two were all purchased brand new and the last one was a pre-owned sports car (one-year-old). The first two has over 130k miles and the 3rd car has 54k. They are all running great. My take is for a more luxurious vehicle, I would opt for buying pre-owned. The discounts can be huge.

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