Why I Bought a New Car Instead of a Used One

What's Hot

23 Upgrades Under $50 to Make Your House Look AwesomeAround The House

Trump Worth $10 Billion Less Than If He’d Simply Invested in Index FundsBusiness

Do This or Your iPhone Bill May SkyrocketSave

11 Places in the World Where You Can Afford to Retire in StyleMore

19 Moves That Will Help You Retire Early and in StyleFamily

What You Need to Know for 2017 Obamacare EnrollmentFamily

8 Things Rich People Buy That Make Them Look DumbAround The House

50 Ways to Make a Fast $50 (or Lots More)Grow

32 of the Highest-Paid American SpeakersMake

The 35 Two-Year Colleges That Produce the Highest EarnersCollege

5 DIY Ways to Make Your Car Smell GreatCars

Amazon Prime No Longer Pledges Free 2-Day Shipping on All ItemsMore

More Caffeine Means Less Dementia for WomenFamily

7 Household Hacks That Save You CashAround The House

5 Reasons a Roth IRA Should Be Part of Your Retirement PlanGrow

30 Awesome Things to Do in RetirementCollege

Beware These 10 Retail Sales Tricks That Get You to Spend MoreMore

9 Tips to Ensure You’ll Have Enough to RetireFamily

No, this was not a silly impulse buy, but a well-reasoned decision.

This post comes from Len Penzo at partner site Len Penzo dot Com.

I finally relented and bought myself a new car.

I can understand why some of you may be scratching your head at my decision to buy new instead of used. Especially when the playbook of good personal finance habits clearly states — right there on page 31, paragraph 6, subsection 2a — that it’s better to buy a used car that is a couple of years old, thereby letting the original owner take the depreciation hit for driving it off the lot.

So, did I lose my mind? Was this another impulse purchase on my part? Have I suddenly moved to the dark side and become financially irresponsible?

No, no, and no.

Remember, despite the conventional wisdom, there are very few financial rules of thumb that are truly sacrosanct, applying to all people all the time.

After all, that’s why they call it personal finance. What makes sense for me might be completely unreasonable to you, if only because our financial situations are light-years apart.

In my case, there were more than a few reasons why I felt it made perfectly good sense to buy a new car instead of a used one. Here they are:

My savings accounts are fully funded. I have more than six months of savings in my emergency fund, and my smaller rainy-day fund is loaded and ready for the next minor crisis. Meanwhile, I’m continuing to make contributions to my retirement savings, which are also in good shape.

I’ve paid my dues. By driving my last car for well over a decade I was able to save more than $40,000 in car payments. That’s money that helped fund my savings accounts and retirement funds. It’s also a big reason why today …

I can afford it. I could have paid the dealer cash for the vehicle, but I decided to take out an auto loan instead because I got …

Ridiculously cheap financing. There’s a reason why it pays to maintain excellent credit scores: They give you the opportunity to borrow money at the lowest rates. In my case, I was able to secure a car loan at just 1.9 percent interest. Eventually, I’ll end up paying a little more than $1,000 on my note — over five years. By the way, this is a great example of how …

The Fed’s policies reward borrowers (and punish savers). As long as lenders continue to give the money away for a song — and I can afford the payments without impacting my other financial obligations — I’d be crazy not to take it.

I’ll be keeping the car for at least a decade. Holding my car for at least 10 years will help temper those painful depreciation costs I’ll be incurring over the next several years in exchange for the pleasure of driving my very own brand-new car.

Hopefully, I’ve convinced you that being financially responsible and buying a new car aren’t necessarily mutually exclusive. The truth is, financially responsible folks can sometimes get away with buying a new car — even though the conventional wisdom says that isn’t the most financially advantageous option.

Ultimately, the “right” decision is going to depend on the state of your personal finances.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: 5 Expenses That Vanish During Retirement

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,675 more deals!