You might have heard that buying a new car is a huge waste of money because they depreciate so quickly.
So why do people buy new cars?
People buy new cars for several reasons. New cars are more reliable than used cars. They are cheaper to finance, come with a warranty, and don’t have any history to worry about. New cars also come with the latest technology and can have the spec individually customized.
Continue reading for a full list of the reasons why people buy new cars.
We’ll also discuss if it’s actually better to buy a used car instead.
Why People Like Buying New cars?
There are numerous reasons why people like buying new cars. Let’s take a look at some of the main ones:
1. New Cars Are More Reliable Than Used Cars
New cars are more reliable than used cars, and break down much less often. AAA recently stated that if you drive a car that’s 10 years or older, then you are twice as likely to break down than if you drive a newer car and the odds of requiring a tow quadruple.
If you do your research and buy a new car with high-reliability ratings, it can go up to 20 years.
Now that’s value for money.
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2. New Cars Come With A Warranty
People buy new cars because they come with a factory warranty included in the price.
If a new car has any issues at all within the first few years (usually about 36,000 miles) then it will be fixed for free.
While used cars can be reliable too, you have to do a lot more research to make sure that the previous owner treated the car well, as you’ll have to pay for any repairs going forward.
3. New Cars Don’t Have A History
People buy new cars because they don’t have to worry about their history.
No worrying about how the vehicle was treated by the previous owner. No thorough checks of its service history or for sneaky modifications.
When buying used, you usually have to place a significant amount of trust in the seller. New cars provide peace of mind that the car is brand new and comes directly from the factory.
4. New Cars Have The Latest Technology
Car technology is advancing all the time.
New cars come with the very latest comfort, safety and performance technology.
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5. It’s Cheaper To Finance New Cars
People buy new cars because It’s cheaper to finance a new car.
A new car has a set value, while a used car’s value is pretty uncertain.
New car owners also have a better track record of paying back their loans.
This all means it’s much riskier for lenders to finance used cars, which means higher interest rates.
6. New Cars Can Be Customised
People buy new cars because they can customize the spec of the car to their personal tastes.
With a new car, you can choose spec options like paint color, window tints, seat fabric, tire size, audio and entertainment, and much more.
Buying a used car usually means you have to settle for someone else’s spec, and many used car buyers end up spending a lot of money on expensive modifications.
7. New Cars Are A Status Symbol
People like buying a new car simply because it’s brand new. Just like with iPhones, many people like having the latest shiny new thing.
There is a certain prestige or social status that comes with this.
8. New Cars Can Have Good Resale Value
Certain new cars, like Toyota or Honda, have excellent resale value.
It’s not uncommon for people to buy a new Toyota, drive it for 5-7 years, then sell it for 50% of its original price.
This means the owner got to drive around in a new, reliable, and safe car for 5 years and still got back 50% of the money they paid for the car.
The key here is buying a new car that holds its value well
9. New Cars Can Sometimes Be Cheaper To insure
New cars can be cheaper to insure because they come with the latest safety features, and are cheaper to have parts and repaired or replaced.
However, this depends on the make and model you buy.
For example, some cars are stolen more regularly than others, while some cars have a better safety record than others.
Your driving experience and record will also be a key factor in determining insurance cost.
10. New Cars Are Easier To Buy
Let’s face it, new cars are way easier to buy than used cars.
With a used car, you have to do a lot more research and due diligence before purchasing the car.
You have to check the service history, inspect the car, speak with the previous owner (and trust them) Unless you are buying from a certified second-hand car dealer, there is also a safety risk when you meet the seller.
When buying a new car, you don’t have to worry about all this.
You know what you’re getting, as the car has come direct from the factory.
Why Buying A New Car Is A Bad Idea
There are a few reasons why buying a new car might be a bad idea.
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New Cars Cost More Upfront
New cars obviously cost more than used cars.
That means not only will need to be able to afford the cost of the car, you’ll also need to be able to afford the increased cost of sales tax.
You should only buy a new car if you can afford it.
A New Car Depreciates Quickly
The biggest downside to buying a new car is how quickly it depreciates.
It will then lose from 15- 25% of the remaining value each year until it’s 5 years old.
Therefore, most experts believe buying a slightly used car (3 years or less) provides the best value when buying a car
Is Buying A New Car A Good Investment?
You shouldn’t really consider buying a new car as an investment, because it won’t make you money as such.
As soon as you purchase a new car, it will start to depreciate.
Instead, think of a new car as an essential asset, something you need to survive and get from A – B safely.
Therefore, It is not a good idea to buy a new car if you can’t afford it.
Experts believe you should only spend between 10-50% of your gross annual income on a car
Final Thoughts – Why Do People Buy Used Cars
Although you’ve probably heard that buying a new car is a bad idea.
However, there are lots of good reasons why people buy new cars.
If you can afford to, why wouldn’t you want a reliable new car that includes a warranty and has the latest performance and safety features?
You also have to remember that a new car (just like a new watch or new iPhone) is seen as a status symbol by many.