What’s not to love about a new car?

This is a guest post from Katrina Ramser, a freelance writer who contributes new-car reviews for various websites, newspapers and magazines. She also writes about swimming at SquidKid.

I love new cars. From the luxury mid-size utilities to the efficient little guys, all have that new car smell — clean, pure, new.

I can get wrapped up and taken away with an SUV's strength and sleekness in the snowy mountains of Tahoe, or just bullying into a Whole Food's parking space. And I seem to develop a more practical and sustainable look on life after peaceful time spent on long drives with a Toyota Prius, or the overlooked (but so charismatic once you get to know it!) Hyundai Azera.

And the vehicles just keep changing and improving with each passing year, hoping to catch my eye and dazzle me once more with their ability to stay young forever. What's not to love about a new car?

Always the Bridesmaid, Never the Bride

I can write poetry about each and every model and maker I've had the pleasure to have known. I am an auto journalist.

It's my job to date and judge vehicles. I do have preferences, like a man might for a tall blonde, or how females fall under the spell cast by bedroom eyes. For example, if a car doesn't have power seats, we're off on the wrong foot. And when I meet a vehicle that has four-wheel drive capability, better than average gas mileage, and a clean and reliable past, I am swayed. I always remain objective, but I'm guilty of enjoying each and all of the vehicles I drive. I ask you again, what's not to love about a new car?

But it's just my job to date, never to marry. It's a personal decision I made a long time ago to always be the bridesmaid, but never the buyer. I've never taken the new car plunge. Ever.

I'm wary of the price you must pay for such glorifying newness. When I was younger, I could not afford a new car. Now that I'm older and wiser, it's more like I will not afford a new car. I've seen what they do to you, and I know some types of love are not worth the headache and entrapment, no matter the pressing desire.

Financial Breakdown

Last year, I did my boyfriend's bookkeeping, which included tracking and calculating the costs of the 2005 Dodge Ram 1500 that he bought brand new. Almost three years into Shane's ownership contract, I discovered he spends an average of $1,000 a month on the vehicle.

The average monthly car payment is $475. Shane's is $440 plus some change. He was required to buy full coverage, so insurance runs about $189 a month. He has an extended warranty of around $120. Gas in a full-size truck with his engine size costs roughly $190 for 20-mile there-and-back commuting. Registration evens out to $31 a month; car repairs, dealer tune-ups and washes come in at $49; and car accessories averaged $115 a month last year, as he bought a spray-bed liner and lumber rack because it's a work truck. That's around $1,000 per month, or $12,000 a year to own his new car.

He signed a 72-month (6-year) contract with the Dodge financial house, sentencing him to an interest rate I don't much care for: 10.39% (the national average is 7.13% as of this writing). His credit was okay when he was financed for $23,416 — a nice down payment of $7,000 helped reduce that number. But he'll pay an additional $8,285 in finance charges. That's enough for a second car — maybe even two! But it's all so typical in our society.

Coping With Costs

With rumors of a recession in the wind, we've tightened the fan belt and made some adjustments. The car accessories budget should be much smaller this year since he doesn't need another bed liner or rack. Shane's now working in the same town where we live, so gas costs should also be smaller. And he washes the Dodge himself now, though he grumbles that it takes a good hour or so. We also realized (if not too late) an extended warranty is nothing but a pricy piece-of-mind gamble. As for reducing the interest rate by refinancing, we're going to instead make a radical move to double the car payment and get the thing (and ourselves) debt-free.

Despite changes, we're still looking at a lot of money to maintain the cost of living with the new car. We'll call the whole thing a life lesson. It's a lesson many never learn, never realizing a car payment is an option, not a rite of passage.

A new cars loses 25 percent of its value the instant you drive it off the lot. In four years, depreciation consumes most of its original value. The initial excitement dies, boredom sets in, and we're open to temptation again. Usually after about five to six years we start looking around for a replacement.

Young beauties are to be had everywhere! They pass by you on the street, catch your eye walking into the grocery store, and flirt with you at stop signals. I'm talking about new cars, of course. Vehicles today are more insanely capable with each passing year, from the safety to the technology front. In some cases, they even drive themselves!. Cars are only going to get better. They are only going to stay younger.

Old Faithful

We have created a society that doesn't value old things. With each passing year, our love dies a little more for what we once claimed to esteem. Yet I remain faithful to what I drive. I can't admire it in the same light I have for new cars, but I can love it for different reasons.

I have a hand-me-down 1995 Chrysler Cirrus, an after-thought gift from my upgrading parents. It's a car the manufacturer never bothered to make again. There are serious issues with the engine that cannot be found to fix, despite whichever diagnostics machine I've hooked it up to (so much for some car technology). It still drives fine, but sometimes it stalls at stoplights. It costs me under $400 a year to insure. It is totally payment-free. It doesn't guzzle gas. Maintenance has been reduced to tossing broken car pieces like antennas and paneling into the trunk. And with the type of job I have, I don't even drive it too much.

In a sense, I have to keep writing about automobiles in order to be able to afford to drive at all. With the cost of gas reaching an all-time high, I must focus on landing more automotive-related jobs just for personal finance reasons. Sounds sort of sadistic to bank on what's depleting, but I need to drive like the rest of the world, and I kind of think I've found a clever way to do it.

I don't have to buy the merchandise to appreciate or even to recommend new cars. There is no denying what they are. But sampling fills me enough, thanks. After awhile, they just become another pretty face. Because what's not to love about a new car?

Photo by jessicafm.

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My.cold.dead.hands
My.cold.dead.hands
12 years ago

I agree that cars come with expenses (both new and old) many of the expenses that she sited for her boyfriend’s truck were either a reality of driving or a symptom of his own vanity (the car accessories for example). I subscribe to the line of thinking in the book ‘Debt is Slavery’ by micheal mahalik; buy a new car and drive it until the wheels fall off. Yes, there is depreciation, but who cares? I’m driving it into the ground, not for resale. And since I’m the original owner, I know it’s maintenance history and the guy that put… Read more »

JDBuckeye
JDBuckeye
12 years ago

I guess I fall somewhere in between. New cars are EXPENSIVE! However, I would never drive a 12 year old car, both for safety reasons and because, well, it just wouldn’t be much fun. But I do subscribe to the line of thought that you can save a TON of money buying a slightly-used car with under 20K miles on it. I bought mine from a dealer and had a complete service record to look at. I also still had over 30K left on the warranty, which was very reassuring.

Four Pillars
Four Pillars
12 years ago

Interesting post – I bought my current car new and I can’t say that I regret it although I know it costs a lot of $$.

I think the next vehicle (a really cool minivan) will probably be used.

Mike

Schizohedron
Schizohedron
12 years ago

Outstanding writing. One of the best guest posts yet. Thanks, Katrina and J.D.!

Matt
Matt
12 years ago

I agree that owning a new car is typically not a smart thing to do. However, doesn’t writing new car reviews and talking about how great they are only encourage people to buy new cars and get themselves in more financial trouble. I can’t imagine Katrina includes the personal finance advice she espouses here in her auto reviews. I am impressed, though, with her ability to avoid the new car temptation in her own life.

brad
brad
12 years ago

After a long run of bad luck with used cars in my 20s, I decided to buy new despite all the good arguments against it. I guess I like knowing how my car was driven and what was done to it; I’m a careful driver and do all the scheduled maintainance, read the manual, etc., and know that most people don’t do those things. Plus I hate the smell of cigarette smoke and I find that even if the original owner never smoked they may have allowed a passenger to do so a few times, and it’s impossible to get… Read more »

anne
anne
12 years ago

I bought a new Toyota Tacoma in 2002, when I was 22. Being a very frugal person, but having zero personal finance savvy, I saved up and bought it straight out. Now that I know a thing or two about IRAs and compound interest, I realize what else I could have done with $18k at that point of my life. I could easily have a downpayment on a house by now, if I’d invested it. But I don’t regret it. I love my truck. It has never required anything beyond very basic maintenance (oil changes, new air filters, tire rotations).… Read more »

Chris
Chris
12 years ago

These days that “new car smell” is cocktail of plastics off-gassing. I find it more noxious than exciting.

Andrew
Andrew
12 years ago

I think you answered your own question…what’s not to love about a new car? The price tag.

Badger
Badger
12 years ago

I’ve bought both new and used, and now am firmly on the side of buying certified used cars. Honda, for example, has a great program that I’ve been very happy with, but other manufacturers do the same thing. One nice side effect of buying used is that you avoid the “pure” new car smell, which is actually produced by airborne toxins that new car materials release.

David
David
12 years ago

This post doesn’t impress me much. There’s nothing wrong with buying a new vehicle. There is, however, a lot wrong with making a bad purchasing decision as described in the article. Those are two very different things. And a 10% interest rate: Yikes! You should never settle for a rate like that unless your credit is bad and you have no choice. If you buy a new car, the right one for your budget and lifestyle, and then drive it until you wear it out, you’ll be fine. In fact, this may be a better way than buying used. I… Read more »

Get a Grip Girl
Get a Grip Girl
12 years ago

I have driven only used cars for the past 4 years. Three infact. My first was a Honda 1992 that I had sold to a friend due to moving to another state. It still runs to this day. My second was a 1997 Saturn that was involved in an accident (my friend drove it) and I wrote it off. He reimbursed me for the car. My third now is a Chevy Lumina 1997. All my cars had been less that 2000, and I never had problems with them. It had also reduced my insurance greatly as I had never been… Read more »

MITBeta @ Don't Feed the Alligators
MITBeta @ Don't Feed the Alligators
12 years ago

Whenever I start feeling like I should go look at new cars, I get the cars I have professionally detailed. What a difference that makes! It’s like having a new car. I had a car that I was selling detailed and almost changed my mind on the sale!

Detailing isn’t cheap, but it’s a lot cheaper than one single car payment.

Ian
Ian
12 years ago

Disappointing post. What’s with the men preferring tall blondes and women falling for bedroom eyes stuff? And are we to take advice from someone who dates a $1000/month truck guy? And now they are going to double their payment? Perhaps the best financial advice would be to get rid of that over-accessorized beast for something a bit more cost-efficient and practical. If he needs a truck fine — there are cheaper one’s out there. And there is a difference between buying a new $40k truck and a new $17k Civic. I think we’ve had much better car-buying discussions in the… Read more »

Ryan
Ryan
12 years ago

The worst possible time for me to read such a post. I’m 21 and only a few months away from graduating. I have driven my ’91 Volvo to 230,000 miles and its still running. But I have a cross country move coming up for my first job, and its time the Volvo and I parted ways. I am seriously considering getting a new car and just driving it for many many years. I have a decent bit saved up and could pay the car off in less than 3 years. Cars is a point where frugality and hobby meet and… Read more »

James
James
12 years ago

What an awesome POST! I am 21 now, and got my first car when I was 16. My dad found a really good deal on a 1994 Honda Accord. We paid cash for it and I have been driving that same car for almost 6 yrs now. It’s required almost zero moolah in maintenance. When I think about it, cars are not an investment, but just a necessity (for most folks) in everyday life. It is sad to think about the amount of importance people place on owning a new car. Sure I think its perfectly fine to own a… Read more »

J.D.
J.D.
12 years ago

It’s been a while since I shared my ongoing struggle against purchasing a Mini Cooper. Maybe if I do it in the comments, it won’t count as mentioning it on the blog. 🙂 As your recall, I’ve made a vow that I will not buy a Mini Cooper until I’ve built my emergency fund. (My target is $10,000, growing to $20,000.) I’m saving money very well right now — I’ve kept my spending in check — and should hit $10,000 sometime mid-year. (It’s hard to know exactly when because my tax picture for 2007 and 2008 is still murky.) So… Read more »

J.D.
J.D.
12 years ago

@MITBeta

What is detailing, exactly? I’ve heard the term used, but I’ve never known what it means.

KC
KC
12 years ago

I’ll tell you what I don’t like about new cars… In Aug of 05 I had to put down my 89 Stanza and I took some saved cash (cause I hadn’t made a car payment since 1994) and bought a nice used Acura. Its a very nice car and is aging well. Last May my husband’s 10 year old Civic was totaled. He needed another car and wanted a manual transmission – I wanted something a little more family oriented than another small coupe for him. Used manual’s are hard to find in a sedan. So we ended up buying… Read more »

Erin
Erin
12 years ago

Detailing is having your car professionally deep cleaned I believe. It really is an awesome way to make you feel good about your car again. I had a new car when I was 16. It was just my mother and I, and she wanted to know that I had something new, reliable, and that was under warranty so she didn’t have to deal with repairs or anything. I don’t know that she got the concept of pre-owned, and what did I care? I had a new car! Which I totalled…and then got another new car. We were not rich by… Read more »

KC
KC
12 years ago

JD – Detailing is having your car professionally cleaned and “shined”. Usually they remove the seats, clean everything, shampoo the floormats and carpet, then apply Armour All over the dash and other vinyl/rubber parts. They’ll wash and wax the outside and put the shiny stuff on your tires. Its sort of like a makeover for your car. It can run anywhere from $50-$100 bucks in my part of the country. Personally I just hand wash my car regularly (depending on the weather) more than once a month. I clean the windows and vacuum if needed. I also dust the dash… Read more »

Michael
Michael
12 years ago

I liked the style of this post.

Starving Artist
Starving Artist
12 years ago

I agree with many of the above comments–this purchase was a particularly bad deal. If you want a brand new car, you’re paying a premium for the luxury of having that car, which is your decision. There’s nothing wrong with making this decision, if you can afford it. Buying at 10% APR means he hadn’t earned that new car yet. And what’s with all the extras?

Seems like the dealership saw him coming from a mile away.

CPA
CPA
12 years ago

The > 10% interest rate boyfriend is paying on his truck is ridiculous; his credit must be shot. There’s no reason to pay more than 6-7% for a vehicle. A couple where one drives s paid-for 13 year old vehicle and one drives a 10% loan is destined for financial fights.

Dan
Dan
12 years ago

Hey JD,

I say DO IT! Go for a used Mini! I think you deserve it.

You of all people should know how to do it right: save up for a sizable down payment, shop around, get a nice low interest rate, work it into the budget, and be a smart shopper.

I don’t see how you can go wrong.

td
td
12 years ago

I spent $150 for detailing (wash, vacuum, seats/carpet shampooed, hand wax, glaze on dash, glaze on tires). It really depends on where you go. My car was fairly clean though. My father usually gets his car done once a year for $100 which I think is cheap considering how dirty his car gets.

Frugal Dad
Frugal Dad
12 years ago

It is shameful how much we spend on automobiles in this country. I drive a 1991 work van with no radio and no air conditioning. It gets me back and forth to work, and sits in my driveway most of the weekend. My wife drives a 2000 Chevy Tahoe that we purchased five years old, private sale. That will be the last vehicle I have to finance, and we will have it paid off within a year. One can become incredibly wealthy by throwing $475 worth of would-be car payments into mutual funds every month over the course of a… Read more »

web.serf
web.serf
12 years ago

Don’t buy anything you see on a rental car lot. Rental companies keep cars for about 3 years and then sell them before they go off warranty. They sell thousands of cars a year and flood the “pre-owned” market, driving the value of certain models down. European cars tend to hold their value better because Avis and the like prefer the cheaper domestic and Asian cars.

JerichoHill
JerichoHill
12 years ago

I use the Ramsey method to buy a car. I do buy new cars, because I know how they’ve been maintained, but I tend to run them till they’re scrap. And then I sell the scrap. Every month a little bit of money goes into a high yield savings account, and that account pays for vacations, a new car, or other long-term purchases. Since I bought my new Rav last year, I dont plan on buying another car until…maybe 12 years down the road. Therefore, I don’t feel like I am losing out by not getting the slightly used discount.… Read more »

Sharon
Sharon
12 years ago

I liked the post as well. It was timely for us and I found the comments interesting. My husband and I are 39 and have never had a new car. First because we could’t afford it (our first car we bought used as college sophomores)and then because we always thought it was a bad deal because of depreciation and interest. Our last car, a minivan, we drove until it fell apart at 186,000 miles. Now I have a new used one and my husband drives a 1994 Saturn. The odometer broke at 148,000, but we only paid 3800 for it… Read more »

Mister E
Mister E
12 years ago

I drive a 1994 Dodge Caravan that I acquired in 2006 and it’s still going fairly strong with only one real repair needed in that time.

I’d never buy new, for me a car is a car is a car and I’ve never met one yet that excited me. I’d much rather take transit or walk than drive so they are a burden more than anything and I only take it out 2 or 3 times a week for groceries and a weekly trip to the ‘burbs to visit family and friends.

K
K
12 years ago

My 2000 economy car (do they even make “economy cars” anymore?) has over 180,000 miles on it and still gets around 26/36 mpg. That’s nearly as good as a brand new Civic Hybrid, and it didn’t cost nearly as much.

People drool over hybrids, completely oblivious to the fact that we used to expect such standards from conventional engines.

Nancy
Nancy
12 years ago

My husband and I have bought new cars–a Honda Accord we kept for 14 years, only had 125K miles on it and got an excellent trade in for our Odyssey van a couple of years ago. Our other car is a 10 year old Accord we will drive into the ground. We have loved our Hondas for their extreme reliability–we’ve had next to nothing to fix on either Accord. My husband takes meticulous care of our cars and since we keep them for a long time we are very happy with our decision to buy new.

Ben
Ben
12 years ago

K, while I agree with your statement that conventional engines can get great mileage, I’d hardly say 26/36 mpg is “nearly as good.” While I can only offer anecdotal evidence, my friends that own or used to own hybrids got significantly better mileage. One recently bought a used Civic Hybrid for $10k, and regularly gets 50+ mpg. Regarding the original post, if your new car is depreciating 25% when you drive it off the lot, financially I’d say you made the wrong choice, and should have bought a lightly used model. If you do your research, you’ll see that several… Read more »

rstlne
rstlne
12 years ago

I’ve only had two cars so far but both times, I bought the car new with cash. The first one, I drove it until the whole front end was just about to fall off. The second one is still going. I don’t think it’s so bad if you save up for the car. The loan is what costs a lot.

commonsense
commonsense
12 years ago

or you can live in the city and not own a car at all!

i pay 45/month for san francisco muni monthly pass that takes me anywhere i want to go in the city, its great and its saving me a TON of money!!

at 24 it wouldn’t be smart for me to put a lot of my $ into a car, that money is better off going to my 401k!

Becky@FamilyandFinances
12 years ago

I very much enjoyed the style of this post – very fun!

I’m in the used car camp. My past used cars were all financed and paid off fast. This time I’m saving up for the next new used car and will pay cash. No car loans for me!

Kristi Wachter
Kristi Wachter
12 years ago

Hey J.D., Here’s one approach you could take to your craving for a Mini Cooper: * decide you won’t buy one until you can pay cash (comfortably!) * give yourself permission to buy the fancy bike * while you’re saving up, pick a special occasion – your anniversary, your birthday – and rent a Mini for the weekend. See if the fact that you can enjoy one for a few days – for a fraction of the cost – satisfies your craving. And note to Ryan: as others have said, there’s nothing wrong with buying a car new if you… Read more »

Josh
Josh
12 years ago

@ Ryan (post 15)- I’m in the exact same shoes as you (only up until this point, being in college I’ve gotten by on a bike and by foot). I’m moving 2,000 miles away for my first job as well (from the cornfields of IL to the everything of WA). I took the plunge in February and bought a new car. Just over 20K and like you, I will have it paid off in 3 years. I think this will end up a good decision for 3 reasons: 1) I got 1.9% APR financing through Mazda. Therefore I will only… Read more »

redhead68
redhead68
12 years ago

re Commonsense…Great minds think alike. My spouse and I are currently buying a house within walking/biking distance of his workplace, the kids’ schools, shopping & a light rail station. We currently own two paid-off cars, but soon we’ll be a one-car family. Our friends and family think we’re nuts, but I’m positive we’ll be just fine.

squawkfox
squawkfox
12 years ago

I’ve never actually owned a new car. I tend to plan my living arrangements so I may either 1) Walk to work, 2) Bike to work, 3) Bus to work. I find my wealth grew in leaps and bounds when I ditched my car. My savings increased and my fitness also increased. Ohh, I also lost some weight which was a super nice bonus to being car-free.

jtimberman
jtimberman
12 years ago

Used cars only for me. I bought a brand new car and the depreciation hit when I sold it made me sick to my stomach. It was only 3 years old, and had lost over half its “value”.

I’ve bought two cars for half the price I sold that one for, so I’m pretty unconvinced that money spent on cars is money well spent.

sal
sal
12 years ago

about two years ago i bought an ’85 vw golf for $1500. gets about 45 mpg and paid for itself in fuel savinigs in abaout four months. now two years later, do the math.

if you do buy used, try buying from a mechanic, not a dealer. they usually will pick up used cars and rebuiild them, then you have some instant accountability and relationship with the guy.

if you must buy new, keep waiting, electric is rigt around the corner, and in the meantime, vw has the new golf hybrid, gettiing about 70 mpg. http://sustainabledesignupdate.com/?p=635

Dave
Dave
12 years ago

I’ve had both new and used vehicles and prefer to buy new. I say vehicles rather than cars because I’m a motorcyclist. Although when the bikes I buy run around $20k, the difference between them and a car, finance-wise, is small. I do tend to keep vehicles until I run them into the ground however. My current bike, a 2000 model, is at just under 100k miles. However, I also currently have an 89 Volvo that mostly sits in my driveway. Why don’t I get rid of it? Well, it’s paid for and the insurance and registration for it is… Read more »

Lisa
Lisa
12 years ago

Cars are a sink hole for money, the way I look at it! I buy very practically, Honda or Toyota, and drive them until they drop. Proper maintenance pays for itself in the long run.

Lisa

The Tim
The Tim
12 years ago

Hah, I was just coming here to express my amazement that (even though it was a guest post), J.D. didn’t manage to squeeze in a reference to his future Mini Cooper in there.

Only to find out that there it is in the comments at #17. :^)

Hannah
Hannah
12 years ago

Good post! However, while I have never owned a new car myself, I would prefer to go with something smaller and a much smaller cost to go with it. My current car costs me under $60 to fill completely, which I am very, very happy with. Small cars, even new, can end up being relatively cheap!

Brett from Common Cents for Everyone
Brett from Common Cents for Everyone
12 years ago

I whole-heartedly agree with the subject of this guest post, and I see that more people are adopting this mindset. In fact, I recently posted here about my process for purchasing a “new to you” car.

Daniel
Daniel
12 years ago

I have bought new, and I have bought used. Every time I have bought new, the car has worked flawlessly for me as long as I have had it: – 1994 Saturn: 128k miles over 9.5 years – 2001 Civic: unknown mileage over 2 years – 2003 Jetta: 63k miles over 5.25 years (and counting) – 2006 Jetta: 40k miles over 1.75 years (and counting) Every time I have bought used, the car has had major problems: – 1988 Jeep Cherokee (massive oil leaks, and other issues) – 1989 Jeep Wrangler (various issues, too long to list) – 1999 Ford… Read more »

The Weakonomist
The Weakonomist
12 years ago

I just bought a 2008 Accord (http://weakonomics.com/2008/03/10/the-weakonomist-buys-a-car/) in January. If you do it right, the dealership will take the drive off the lot hit. The price I paid for my car is LESS than the KBB value of a 2007 Accord. I’ll own this car until at least 2020.

I put 50% down and will have it paid off in 9 months.

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