A new car can be good for you

by Admin
Updated: May 8, 2019

How a new car can be good for you financially as well as psychologically and can even save your life

If you absolutely must have a car, consider the benefits of a brand new one.

The standard advice is don’t buy a new car because you lose so much money in depreciation at the beginning. However, this can be a false economy if what you have is not reliable.

Benefits of a new car

There are several ways a new car wins over a used vehicle.

  1. Safety
  2. Cash flow
  3. Reliability
  4. Low running costs
  5. Low maintenance costs
  6. Manufacturer warranty
  7. Perceived status boost
  8. Psychological boost
  9. Care is rewarded

Safety

Newer vehicles have higher safety standards. No financial saving is compensation for not surviving an accident.

Some years ago, my partner had to drive the highways every day. She had a nice car but the way people drove on the beltway made me nervous so I put her in something new & stronger.

A year later, she got side-swiped in the rain at night at speed. The car hit the central reservation, flipped through the air and landed on its roof. Fortunately, the vehicle was strong enough to protect her from serious injury.

Saving money on a car is a false economy if it doesn’t save your life

Cash flow

It is easier to get soft start financing (a no-money-down deal and relatively low payments) on a new vehicle than a used one.

I took over running a business that operated aging vehicles. There were so many problems with them I decided to replace them all. Soft start financing combined with reduced costs and improved efficiency meant I was able to achieve a lasting positive cash flow.

Given that ongoing costs should be significantly contained (see below), new vehicles make cash flow planning easier and more accurate.

Reliability

A vehicle that breaks down can cost much more in terms of lost utility & time than simply the cost of the actual repairs.

More difficult to measure but arguable more important is the effect of missing or being late for appointments.

Low running costs

Newer vehicles are more fuel efficient and generally cheaper to run from day-to-day. This adds up.

Low maintenance costs

Depending on your choice of vehicle, scheduled maintenance costs should be relatively low.

Manufacturer warranty

A new vehicle comes without expensive surprises - no unexpected expensive high-cost repairs or replacement parts.

Perceived status boost

A new vehicle suggests you are doing well - something people find attractive. If done right, it can result in an increase in income.

If you are running high-visibility service or delivery vehicles. The PR benefits of shiny new ones can be significant. This can be difficult to measure but I have been personally present when this led directly to a major buying decision.

Psychological boost

The psychological boost works in both directions. A new vehicle can make you feel more successful. This has a positive effect on you demeanor which in turn can lead to real improvements in your performance.

Care is rewarded

The useful lifetime of a vehicle is directly related to how much care you take of it. If you keep it clean, avoid excessive mileage and maintain it properly, it will have a higher residual value. This applies to leased vehicles as well as purchased ones.

Additional benefits of a new vehicle

  • You get to choose the vehicle specs.
  • No hidden damage caused by a previous owner.
  • Lemon law protection (only applies to new vehicles).
  • Roadside assistance is sometimes included for free.
  • New vehicle smell (fades eventually but lasts longer the more you keep the interior clean).

More info

Shop the loan, then the car - Financing provided by your auto dealer might be easy & convenient but it might also be expensive. Check out the “Best Auto Loans” guide at lendedu.com for helpful tips and links to providers.

The “Benefits of Buying a New Car” are supported at cars.com and at cashmoneylife.com.

“Should You Ever Buy a Brand New Car?” - moneyunder30.com.

Whether you decide to lease or buy (see edmunds.com), always run the numbers carefully in advance with special attention to cash flow. I usually prefer to lease with an option to buy at the end.

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