Do you need a new car?

New cars are very appealing. They smell nice, they look nice, they even drive and run well. Owning, or should I say buying, a new car is even exciting, at least at first. I think that the advertising works too, it's all very appealing.

Once the newness wears off, and you get your 3rd little ding in the door, it's worn off. The first one made you upset, the second made you shrug, the third was not all that surprising. At least not to me...

I saw a commercial this evening that caused me to stop and think. It was a commercial for a new Audi, the payment was $599 a month. Oh my goodness, what a bargain! $600 dollars a month, just for the payment, not to mention the insurance, gas, and maintenance. OK, so that car costs $7,200 a year in payments. $36,000 after 5 years. Did you know that most new cars lose 60% of their value after 5 years. So, that car you just paid $36,000 for is worth only $14,400 after 5 years. And trade in value will likely be even lower than that. That's probably the private sale price. How fun was that? You threw away $21,600, that's $360 every month, gone forever, for 5 years.

Now take a used car that you got a great deal on? I bought a used BMW 525 that was in awesome shape and had low miles. It's been a great car. I paid $4250 for the car more than 5 years ago and mechanically it's been very low maintenance. Not to mention that I paid cash, so I could carry liability insurance to save money. I plan to drive it for many more years to come, but since to this point I have driven it for 5 years my monthly purchase price is only at $70 a month. I was excited to get the car, and its been fun to drive. It's newness feel fell away just the same and as fast as the new car we bought before that.

The point is, you can spend a lot on a new car. It's one of your largest expenses. Buying used can save you a substantial amount of money. For the price of the new car I could have bought 5 of my used cars. That's a new (used) car every year, without even selling any of the ones you would acquire over that time.

If your looking for a place to save money, this is a real big one. I have to say that I will likely never buy another new car, it feels too much like throwing away money.