The New Car Mistake

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When I see someone gloating about their new car, I struggle to share their excitement.  In fact, I usually feel anguish more than anything, which is quite a buzzkill for the new owner.  This is because most of the people I see buying new cars are buying something they can't afford, or they are buying far more than they need.  In this article, I'm going to do my best to talk you out of the new car mistake.

New car excitement lasts about 1-2 months, while the payments last for 60

For some (myself included), buying a new car is an impulse buy.  I made this mistake many years ago, and it took long time for that mistake to go away.  It was an emotional buy, mostly out of boredom.   What happens with emotional buys is you don't think about the long term effects, like what the total cost of the vehicle will be with interest payments.  This is why dealerships always talk about monthly payments instead of total cost.

A car is not an asset

Another mistake (or justification) people make is to call their car an asset.  Your car is an expense, therefore it is a liability.  If you are using your car to win cash prizes at underground drag race tournaments, then you can call it a liability.  Chances are, this is not the case.  So remember, the higher the price, the bigger the liability.  The more you pay each money for a car, the less you can put away into savings.

New job, or promotion is not an excuse

This one really makes me cringe, and I see it constantly.  Someone gets a new job or promotion, and immediately goes out and buys a new car.  Now you're locked into that payment for the next 60-72 months.  If that job or promotion doesn't work out, you're now stuck with the stress of making that payment.  Don't fall into the trap of matching your expenses to your income, unless of course you enjoy life in the rat race.  If you need to take a loan out for a car, keep the cost to a minimum.  Put the extra money in savings or invest it.  If you really want an expensive car, save you money, and wait until you can pay cash.

New cars not always a bad choice

I'm not saying a new car is always a bad idea, but it is when you buy more than need, or when it's unnecessary.  New car warranties and lack of maintenance issues can eliminate unexpected expenses, and the gas mileage continues to improve with every year.  As I always say, do your research, and find the car that makes the most sense for you.