Bestselling author and self-made millionaire David Bach once said, “Buying a brand new car looks and smells good, but it is never worth the price.” He goes on to state that there is nothing that you will buy in your lifetime that is a bigger waste of money than a car. His argument is the fact that the very moment you drive your brand new car off of the dealership lot, it starts to depreciate. And to make matters worse, most people have to take out a loan to purchase a car. Basically, you borrow money for an investment that immediately goes down in value and continues to depreciate year after year. But there is good news; you don’t have to buy a car to enjoy that new car smell and enjoyment; you can always lease. Say you have your heart set on a new Armada, swing by your local dealership and check out Nissan lease deals; it could be a better choice for you.
It is almost a rite of passage that every adult experiences the status and satisfaction of owning a car. The problem with this dream is that it’s not always such a good idea. A better idea, and most experts on the subject agree, is to buy a used car or a Certified Pre-Owned vehicle. The problem with this is you will never enjoy that new car smell or enjoy driving a car fresh off the lot. If you really want to experience all that a brand new car has to offer without having to make a purchase, leasing is a fine option that makes financial sense. Here are a few reasons why you should never purchase a new car.
Buying a Car Is Not a Good Investment
Like most bad investments, buying a car is driven mainly by emotion. You must admit, you are glued to your 60-inch television for the entire duration of a Ford Bronco or Chevy Camaro commercial. You might even flip open your laptop and gather additional information or watch videos of the Bronco splashing throw rivers or climbing rocky trails. And the thought of spinning the wheels of a brand new Camaro nearly brings you to tears.
We aren’t pointing fingers or calling out Chevy or Ford as all brands do this; they want to entice us into buying their products; it’s the way things work. What’s worse is that these manufacturers entice you in other ways, like by offering cashback on your purchase, giving you optional extras for free, or throwing in a couple of years of oil changes at a discounted rate. Again, it’s no different when Wendy’s kicks in a small Frosty when you upgrade your Jr. Cheeseburger meal deal.
Incentives are great when it is a product that you really need, like food or a new furnace to replace the one that just expired. But here is the thing, you might need a mode of transportation for any number of reasons, to get to and from work or to run your business, but you don’t necessarily need a brand new vehicle. Used vehicles will definitely get the job done at a lower price.
So, why exactly is buying a new car a lousy investment? Well, the plain and simple reason is depreciation. According to Carfax, a new car’s value will drop roughly 20% in the first year and 15% over the next four years. That means that by the time you have owned a car for five years (the average length of time it will take you to pay it off), the car will be worth 40% of the initial purchase price. Essentially, by the time you own the car, you will have paid far more than it’s worth, and you won’t get anywhere near what you paid if you try to sell it. So, as an investment, a new car simply isn’t worth it.
That said, in no way are we trying to discourage anybody who wants to buy a brand new car. Without a doubt, it is the dream of many to make that all-important new car purchase, and who doesn’t want to cruise the strip in a new Camaro or climb a mountain in their brand new Bronco. However, you can just lease one of these new vehicles and pay for the joy of driving a new vehicle. With a lease, you are paying for the value of the car you use, and then you can return the car and get another new vehicle in a couple of years. You’re still spending money, but you are investing in the full use of the car as a product, rather than paying for the value you use and then some.
What Happens When the Warranty Expires?
If there is one great thing about a new car, it’s that you don’t have to worry too much about any problems that might arise, thanks for the most part, to the warranty. Warranties are a big reason why people opt for new cars as they give them peace of mind and helps them sleep better at night. But at some point, that warranty is going to run out, and you are going to be stuck footing the entire repair bill right as things may begin to fail.
Let’s break how this works down. According to CreditKarma, the average new car loan lasts an average of 71 months (just under 6 years), and the average used car loan lasts 65 months (about 5 1/2 years). Meanwhile, the current Nissan warranty has a basic coverage plan of 36-months (3-years) or 36,000-miles, with the powertrain coverage lasting 60-months (5 years) or 60,000-miles. That means that your warranties are more than likely going to run out before you even finish paying for the car. So, you suddenly go from making a car payment on a vehicle with a full warranty to making a monthly payment on a vehicle that could break down or suffer some other problem. That’s a lot of money that you will end up paying.
However, with a lease, you can avoid the pitfalls of having to pay out of pocket for major repairs. Most Nissan lease deals last between 24 to 36 months (2-3 years), which falls nicely into even the shortest lease terms. You get the new car you desire, you get to enjoy the full warranty, and you sleep better at night. It’s a win-win.
Do You Have to Lease?
If you aren’t interested in leasing a car and ownership appeals to you, there are still options. The first option is hitting an online marketplace or a used car dealer and simply buying a used car. You don’t even have to worry as much about the condition because with companies like Carfax and VINCheck, a car history report is inexpensive and only a few mouse clicks away. Used cars are an excellent option for saving some money, though they can still have their own set of drawbacks.
If you don’t want to pay for a new car, but you still want some of those warranty benefits, you could visit your local dealership and take a look at their Certified Pre-Owned selection. For Nissan specifically, a Certified Pre-Owned vehicle will have had a 167-point inspection, a Carfax 3-year buyback guarantee, a 7-year/100,000-mile limited powertrain warranty, and included roadside assistance. Basically, it’s a lot of the benefits of buying new without the higher price tag, though it will still cost more than buying simply used.
While You Can Buy, You Should Probably Just Lease
If you are in the market for a new vehicle, there are many ways in which you can reach that goal. You should seriously consider the benefits of leasing as opposed to outright buying a new car. Once you do some research, you will discover there are really plenty of compelling reasons to lease. Each option of gaining a vehicle has its own pros and cons, and each option will not work for everyone. Always consider your financial situation and vehicle needs before committing to buying or leasing. However, we are of the opinion that if you can lease, you definitely should to get the best of all parts of vehicle ownership.