A brand new car looks and smells good — but it's never worth the price, says self-made millionaire and bestselling author David Bach.
"Nothing you will do in your lifetime, realistically, will waste more money than buying a new car," he tells CNBC Make It. "It's the single worst financial decision millennials will ever make."
That's because the moment you drive it off the lot, the vehicle starts to depreciate: Your car's value typically decreases 20 to 30 percent by the end of the first year and, in five years, it can lose 60 percent or more of its initial value.
To make matters worse, "most people borrow money to buy that car," says Bach. "Why would you borrow money to buy an asset that immediately goes down in value by 30 percent?"
The good news is, you can get a shiny, nice-smelling car without breaking the bank, Bach says: "Buy a car that's coming off of a two- to three-year lease, because that car is almost brand new and you can buy it at that 30 percent discount."
turkey_neck69 on November 12nd, 2018 at 17:49 UTC »
A guy I worked with had two years left on his payments. Got into a fender bender (the fix for the damage was like 200-300 dollars). And he decided to just trade it in and buy a brand new one. (same make and model just new). And he was like it's a smart deal because his payments are only ten dollars more a month. He didn't understand that he was two years from owning his car, now he is five years, and 600 dollars from owning.
This was like 7 years ago. And it still aggrivates the shit out of me that he didn't see how stupid that was.
crazycatlady331 on November 12nd, 2018 at 17:36 UTC »
I think it depends on the car. The difference between a new Subaru and an off lease one (~3 years old, ~40K miles) is a few thousand dollars.
deerheadapparition on November 12nd, 2018 at 17:11 UTC »
I was talking to a friend the other day who is a car salesman. He said something about one of his customers, I said I found it weird that he knew them that well since I’d assume someone would buy a car and then keep it for ten years so he would only see them once. He said no he knows a family and the mom, dad and three daughters all got new cars from him, and then replaced them every 2 or 3 years so he had sold the family over ten cars at this point.