Purchasing a New Car Considering purchasing a new automobile that has just left the factory? Many individuals fantasise about it… Nonetheless, it is unquestionably the worst move you can make. At least, that’s the perspective of David Bach, a multibillionaire. Who is also a best-selling book and financial counsellor? He discusses why purchasing a brand new automobile is a terrible investment in an interview: “In practical terms, buying a new automobile is the worst way to spend your money.” This is, without a doubt, the worst financial choice you can make in your life!” Why is this so? Let us now look at his explanation:
As soon as purchased, a new car loses 30% of its value! Is it profitable to buy a new car?
The answer is an unequivocal NO. Why is this so? The fundamental reason, as David Bach points out, is financial. Because you should be aware that the moment you leave the dealership parking lot, your new automobile loses the majority of its worth! Yes, indeed! An automobile loses 20 to 30 per cent of its value within its first year of registration. What about after 5 years? It loses 60% (or more) of its original worth. Wow! Do you understand? This is a lot of money! Take, for example, the best-selling vehicle in France: Peugeot’s 208 II. The basic model with a petrol engine starts at €17,000. One year later, it lost between €3,400 (20%) and €5,100 (30%) of its value! This is known as a money hole… And the end result of all of this? “What makes problems worse is that most individuals purchase their automobile on credit,” says David Bach. “Why borrow money to purchase a house that loses 30% of its value right away?”
The good choice? Buy a used car that is 2 or 3 years old
Don’t worry, I’ve got some wonderful news for you. Yes, you can purchase a great, clean, bright automobile… AND WITHOUT DESTROYING YOURSELF. “If you need to purchase a vehicle, buy it secondhand,” David Bach says. “The optimum time to locate one is between the ages of two and three.” And, if feasible, which is from a lease agreement. “That way, you receive an almost new automobile with a fantastic 30% savings on the purchase price!” Vehicles near the conclusion of a lease term are often in excellent shape. And with just a few kilometres on the clock. Because they aren’t brand new models… This means you may repurchase them for a fraction of their original cost. That is referred to as a good bargain.
Buying a new car is a very bad investment
Are you still not convinced? Davis Bach advises being mindful of the implications of purchasing a new automobile. That is, consider how much this purchase will cost you in the long run: “The’scrappage bonus,’ ‘exceptional promotion,’ ‘VAT reimbursed…'” It’s all designed to make you believe you’re getting a fantastic price on a new automobile. ” Car manufacturers use well-honed sales strategies to persuade you to purchase! The most successful method is to make you consider purchasing a vehicle in terms of monthly payments. They constantly make certain that the monthly payments are modest enough for you to afford them. “Rather of focusing on the number of monthly payments, calculate the total amount you will spend over the course of the year.” Take a look at the credit’s duration.” “Let’s take a specific example: With monthly payments of ‘just’ €295 per month, you are really spending €3,540 throughout the year,” he continues. And it doesn’t include insurance (which is usually more costly for new automobiles) or petrol. Are you willing to forego two, three, or even four months’ pay for this purchase? “Just because we can’t ‘afford’ it doesn’t mean we shouldn’t consider it.” You simply need to ask yourself one question: “Can you REALLY afford a new car?” Why not go with a less costly car that has a few more kilometres on it?”
All financial experts are unanimous on the issue
David Bach is not the only financial guru who advises against purchasing a new car. Kevin O’Leary, a personal finance guru, also warns individuals considering this purchase: “If I need to move about, I call an Uber, and it brings me everywhere in town.” “It saves me a lot of money.” “I detest vehicles,” he concludes, “therefore it’s the perfect option for me.” Suze Orman is a financial advice author and television broadcaster. And, despite her tremendous wealth, she has been driving the same automobile for almost 12 years! His advice is usually the same: purchase an old automobile. The golden guideline for her is not to pick the most fashionable automobile… However, the one you can afford! “One of the finest strategies to create your financial stability is to spend as little money as possible on your automobile,” she says on her blog. Forget about all the gimmicks and extras that would entice you to purchase a new automobile. “After all, a vehicle is just used to commute from home to work!” Because all those additional thousands of dollars you’re paying to buy the newest model… “It’s got to be money you can’t spend on anything else.” The true aim is to save money and pay off your automobile as soon as possible.