Pros And Cons of Buying New Cars
January 6, 2016
Among the investments people look forward to is buying a car whether for business, family or personal needs. Most people would go for a new car, but before making that choice, it is important to know a few facts so as not to get into something that might end up becoming a financial burden. Over the period I have been a mechanic, I have learned that just as used cars, new cars have their advantages and disadvantages.
Pros of a new car
One of the things I enjoy about a new car is that, when I am negotiating prices, I do not worry about the condition of the car. I do not have to do an inspection for previous wear and tear, mechanical problems or even accident history. The car offers what is displayed, hence giving me a peace of mind.
Manufacturers provide warranties as a marketing strategy to ensure that buyers have the best experience within the first few years of purchase. Most of these warranties go up to three years or 60,000 miles, whichever comes first. Commonly nowadays I see vehicles that come with up to ten years or 100,000 miles of warranty for engine and transmission.
The world of technology is advancing at a fast rate that cars are no longer just a means of transport. Every time a new car model comes out, I hear it has something different and more advanced than the previous one. Collision avoidance systems, lane changing warnings, Bluetooth technology among other things have take car to a whole new level they were not ten years ago.
Cons of a new car
Depreciation in value
This is by far the most outstanding of them all. Trying to sell a new car immediately after it leaves the showroom attracts at least 15 percent depreciation. Worse is by the time the loan is done the car will cost 40 percent less its original cost. This even gets worse with very expensive cars.
Insurance premiums are calculated on factors such as age of the car and the model; the newer the car, the higher the insurance will be. All dealerships demand that a new car be covered in full until the end of payment.
Return on investment
Unlike a new home or piece of land, a new car does not have the ability to bring better returns on what is invested. Land increases in value, but a car does not.
In a nutshell, I don’t just buy a car because it is brand new from the manufacturer. There are things I should consider that can help me save money that could otherwise have gone into drain.