Reasons You Should Never Buy A Brand New Car


The intrigue and feeling of buying a brand new car is very exciting. However, after the new car smell is gone and you have made four to five auto payments, the excitement starts to wears off. Here are some reasons about you should never buy a new car.

1. Cars depreciate at a rate of 20% a year

A brand new car depreciates at a rate of 20% per year on average. In fact, the second you drive it off the lot, it has already depreciated 11%. 

2. Your debt to income ratio

A new car can greatly hinder your debt to income ratio. Your debt to income ratio refers to the amount of money you pay each month towards debt in monthly payments, compared to your gross income.

3. Cash is King

Cash flow is more important than driving a brand new vehicle. There are better options than buying a new car like refinancing a car or downsizing. Always explore those first!

4. A new car is NOT an investment

Contrary to what many think and are told from a young age, a car is actually not an investment. Sure a paid-off car does count in the asset column according to the IRS, but other than that cars are not really true assets.

5. Car companies want you to have payments

By getting you to focus on monthly payments that have been stretched out to 60 and 72-month loan terms, they can get them to a point where you can afford that new car.

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