Why Buying a New Car is a Bad Investment

Thinking about buying a new car? While it may be appealing to purchase a brand-new vehicle, this is actually a bad financial decision and a waste of money. You are much better off looking into an alternative that is financially more intelligent while still allowing you to get behind the wheel of a great car.

Why is it a Bad Decision?

So, why exactly is buying a brand-new car a bad financial decision? This is because automobiles are a constantly depreciating asset which is not a smart use of money in any situation. All cars are constantly depreciating but the rate is much higher for a new car and it will lose a significant amount from the moment that you drive it off the lot. You only have to look at the rate of depreciation to see why buying new is not a smart move – a new car can lose as much as 35% after just 12 months and over 50% after three years.

In addition to this, you have to consider the fact that brand new cars are much more expensive to buy than second hand. This means that your money does not go as far so you would be able to buy a much better vehicle for the same amount of money when you shop in the used car market.

New Car Insurance Cost is High:

When you buy a new car their insurance cost is much more than old cars. Compared to old cars the new cars take more money to buy and more days to finish the loans as well as high insurance costs. This is another reason you should never invest your money in new cars. Initially, these costs look normal. But when you calculate the yearly expense then these amounts turn into a big chunk of money. So, consider this point also. 

When it comes to luxury cars never buy a new car:

Yes, luxury car revaluation is very bad. Once you take the car out from the showroom. The car value will drop up to 20%. If you plan to sell the car then you will face heavy loss even after one year of use.

But if you buy an old luxury car you save huge money even though the car is in new condition. These points you should consider. 


The good news is that there are alternatives available. As mentioned, the used car market is a good place to shop because the rate of depreciation drops drastically and your money goes further. Not only this, but the used car market is gigantic so you should be able to find what you are looking for. It is important to note that you should be wary in the used car market and only buy from reliable used car dealerships.

Shopping in the used car market is a good alternative, but you still have to consider the fact that when you sell the car you will be getting less money than what you paid. This is why leasing from somewhere like ZenAuto is a smart idea because you do not have to worry about depreciation or selling the car – you simply return the keys at the end of the agreement and then you can take out a new lease on a more modern vehicle.

Buying a new car is a terrible investment because it is a waste of money and an asset that rapidly depreciates in value. Shopping in the used car market is a smarter move but the best solution is to lease as you will not lose out on any money through depreciation.

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Lara Herrington
With over 12 years of experience, she is a proficient content writer and editor specializing in a diverse range of subjects, including technology news, country news, arts, science, travel, and automobiles.


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