Is it EVER a good idea to buy a new vehicle?

[Hmac]

Only you know your financial situation. If it were me I'd save that money vs a fun car. But, I've been around so many cars in my life that at this point it's just another 4 wheels

Only you know your attitude toward cars, but for many of us, they're a lot more than just 4 wheeled transportation.

In Ron3's example, a $40,000 car with a 5 year loan and no down payment at current interest rates would cost him about $3000 in interest over that 5 years. If he's only financing 20% of the vehicle cost, that loan would cost him about $900, or $180/year average. Only Ron3 knows Ron3's financial situation, but for someone who sees their car as something more than just 4 wheeled transportation, that seems like a pretty affordable way to drive a car that he enjoys. For me, that money saved by buying a used junker would let me retire about a month or two earlier. Assuming that I wanted to retire early (that ship has sailed).

[Arik]

Only you know your attitude toward cars, but for many of us, they're a lot more than just 4 wheeled transportation.

In Ron3's example, a $40,000 car with a 5 year loan and no down payment at current interest rates would cost him about $3000 in interest over that 5 years. If he's only financing 20% of the vehicle cost, that loan would cost him about $900, or $180/year average. Only Ron3 knows Ron3's financial situation, but for someone who sees their car as something more than just 4 wheeled transportation, that seems like a pretty affordable way to drive a car that he enjoys.

Yes sure but when one mentions the possibility of putting "$900" towards retirement makes me think it's that important to where maybe he's weighing the pros/cons. For some people $900 or $180/year is not even a drop in the bucket, for others it's a substantial amount of money. If he hadn't mentioned putting it towards retirement I wouldn't have thought twice about it

[Hmac]

Yes sure but when one mentions the possibility of putting "$900" towards retirement makes me think it's that important to where maybe he's weighing the pros/cons. For some people $900 or $180/year is not even a drop in the bucket, for others it's a substantial amount of money. If he hadn't mentioned putting it towards retirement I wouldn't have thought twice about it

Yeah, it's true. This whole thread/discussion has a complicated overlay because individual attitudes vary so much relative to what they like to drive vs how much they'd rather have the money they'd have to spend.

The OP's original premise asserts that financial planners would all recommend against buying/financing a new car. That's absolutely true. You (the client) are hiring them to help you invest wisely, so their focus is recommending against unnecessary expense such as a new car and new-car auto loan interest. You didn't hire them to accommodate your lifestyle now, you hired them to manage your money wisely so that you can retire comfortably. To them, that $900 is completely unnecessary expense when you could have paid cash for a 6 year-old Hyundai and for them, recommending otherwise runs counter to the reason you hired them in the first place. That "lifestyle-now vs lifestyle-in-retirement" balance is something that is always a tricky balance for financial planners.

[Ron3]

Excellent points.

My current car is "ok" to drive. Its 6 yrs old and has 85k miles. It's not like I "need" a new car. But what I want is going to be around $40k. (The small portion I'd finance would be paid off in about 18 months) I'd guess the rate would be 0-1.9%. Great credit.

So it's either drive what I have (for now) and not spend the money or get something I want.

[Bluto]

Neither. I prefer to lease but it only makes sense of very cheap or very expensive cars.

My wife leases a VW Tiguan. 0 down, 210/month all in with 10k mile/year. That includes all maintenance and brake pads when needed. Trades it in for a new one every 3 years and they waive small wear and tear fees. No way to buy and maintain a car for that cheap.

I also leased a high-end sports car for a year just because. I knew I wasn’t going to keep it longer and the economics of paying through the nose for a short term lease on an expensive car still made sense when comparing buying then selling at a loss.

If the lease payment comes close to a monthly payment then leasing loses its appeal. To me, it doesn’t make sense to lease for 500/month if the payment to buy it would be 600.

[Pandaz3]

I buy new any more, I found I wasn't good at diagnosing some troubles. I could remove and replace clutches, transmissions, and spark plugs, but little else. I have a 2009 with 65,000 bought new, I take it in to dealer for all scheduled and unscheduled maintenance. 2012 with 33,000. 2014 with 44,000. Same maintenance plan. Two newer are always garaged when not in use. Engine bays are clean I trade after 90,000 to 120,000 in the past. Driving less these days so who knows. I only have a couple new cars left till I quit driving.

[hotrodder636]

This pretty much sums it up. Financial planners look at an “investment” that will have a significant loss (depreciation)as a bad investment. But for many, car buying is much more than just a way to work. There are pros and cons to new vs used based on use. Personal financial situation plays a huge role too.

Yeah, it's true. This whole thread/discussion has a complicated overlay because individual attitudes vary so much relative to what they like to drive vs how much they'd rather have the money they'd have to spend.

The OP's original premise asserts that financial planners would all recommend against buying/financing a new car. That's absolutely true. You (the client) are hiring them to help you invest wisely, so their focus is recommending against unnecessary expense such as a new car and new-car auto loan interest. You didn't hire them to accommodate your lifestyle now, you hired them to manage your money wisely so that you can retire comfortably. To them, that $900 is completely unnecessary expense when you could have paid cash for a 6 year-old Hyundai and for them, recommending otherwise runs counter to the reason you hired them in the first place. That "lifestyle-now vs lifestyle-in-retirement" balance is something that is always a tricky balance for financial planners.

[glocktogo]

This pretty much sums it up. Financial planners look at an “investment” that will have a significant loss (depreciation)as a bad investment. But for many, car buying is much more than just a way to work. There are pros and cons to new vs used based on use. Personal financial situation plays a huge role too.

That's me. I was a gearhead before I became a teenager. I was driving on the ranch by the time I was 13 (would've been sooner, but the clutch on that 71' Jeep was STIFF!). Could I drive the same beige Corolla or Camry for 15 years and 200-300K miles? Sure, but I wouldn't want to live to retirement if that's all I had to look forward to at the end of my long work days.

[AKDoug]

This pretty much sums it up. Financial planners look at an “investment” that will have a significant loss (depreciation)as a bad investment. But for many, car buying is much more than just a way to work. There are pros and cons to new vs used based on use. Personal financial situation plays a huge role too.

Funny thing is, my old financial planner (he retired, I didn't hire a new one) had zero issues preaching to me about how I was spending money on my fun stuff and he was travelling the planet spending a ton of money hunting animals (which is fine by me). All of us have to balance out our mental health with having enough money to retire. I buy plenty of stuff that depreciates. Hell, a couple of my AR's have depreciated significantly. I spend more on ammo every year than I give my kids for college. We all make decisions based on our lifestyles.

I wouldn't even know what to do with a car. They don't fit in my life, but I get it when a guy likes to drive a car. I just happen to like to drive fast and powerful snowmobiles and spend my extra money on that.

[Hmac]

Could I drive the same beige Corolla or Camry for 15 years and 200-300K miles? Sure, but I wouldn't want to live to retirement if that's all I had to look forward to at the end of my long work days.

Yup. I'd drive that Corolla too, if I had to. But...I don't have to. And I don't want to be the guy who scrimps all his life so he can retire in comfort, and dies the day after he retires. I want to use at least some of that money now, while I can enjoy it.