Like A Rock
Todd asks why Dave is against buying new cars if you have the cash. Dave explains that it's because a new car goes down in value like a rock.
QUESTION: Todd on Facebook asks why Dave is against buying new cars if you have the cash. Dave explains that it’s because a new car goes down in value like a rock.
ANSWER: Because they go down in value like a rock. That’s where Chevy got that—like a rock. A new car will lose 60–70% of its value in the first four years that you drive it. You cannot afford to turn a $30,000 item into an $11,000 item every four years unless you have a lot of money.
I am not against you buying a new car if you have a $1 million net worth and you’re paying cash and you’re debt-free. As a matter of fact, I have bought new cars, but they were such a small percentage of my world by the time I bought them that it doesn’t matter. But when you make $32,000 a year and you’re deeply in debt, you don’t go buy a $26,000 Harley. That makes you a little boy who put his own little desires ahead of his family. Men don’t do that. It has to do with whether you can afford to take the hit or not. It’s too big a percentage of your world, unless you have a $1 million net worth or greater and you’re out of debt, to take the hit financially. Drive a two-year-old or older car; let someone else take the butt kicking on the depreciation. The worst car accidents happen on the showroom floor.
Yes, I am against new cars when they are a typical percentage of a typical family’s world. But once you get past being typical, then go get you one. I don’t care. I’m not mad at the new car business.