Many people desire a brand-new car. It may provide a sense of dignity and prestige. Whatever a new car buyer gets out of their decision, there’s no denying the hit it takes on their wallet. You can buy from a used car dealership in Los Angeles and spend much less upfront and over time while having a vehicle that meets your wants and needs.
Here are reasons why buying a new car can, in effect, keep you from climbing the financial ladder:
Higher Upfront Costs
In 2022, the average new car price topped $47,000, according to Consumer Reports.1 Car prices are rising dramatically due to a variety of factors. The average price of a used car is now over $33,000.2 But that doesn’t mean you can’t find one under $20,000 to fit your budget.
The downpayment is one of the biggest hurdles in buying a new car. Think about when you need to put 20% down. For a $40,000 car, that means forking over $8,000 in cash. If you have a family of four, for example, it can be hard enough to build emergency savings, let alone save thousands for a downpayment. Then you may still use over 10% of your gross monthly income on car-related costs and expenses!
Higher Monthly Payments
With a higher purchasing price comes higher monthly payments. Lenders are often pretty tight on loan terms. While a longer-term loan may reduce what you pay per month, it can mean paying more in interest and ultimately owing more than the car is worth. A shorter-term loan means paying more per month, but a longer loan can mean you’re still paying off the vehicle when repair costs become an issue.
Any new car loses a significant amount of value the moment it’s driven off the lot. According to Edmunds, creator of the Edmunds Trade-In Value tool, new cars generally lose 23.5% of their manufacturer’s suggested retail price (MSRP) in the first year. In five years, they may lose around 60% of their MSRP.3 This means an average car will retain just 40% of its original value, and that’s if it’s well-maintained. Another striking fact is that expensive cars tend to depreciate even more!
Depreciation can mean the same car you bought is worth less than what you invested in it.
More Costly to Insure
States, dealerships, and financial institutions require car owners to insure their vehicles. And a dealer or lender will require the vehicle to be fully covered until it’s paid in full. You can’t get out of insurance. Nevertheless, it costs more to insure a new car because it has a higher value and there’s a higher risk of theft. Also, think about when the vehicle is damaged or needs repair; new car parts are more expensive, so your premium will reflect this.
Pressure from Upselling
A major step in buying a new car is the sales process. Salespeople are pressured to reach specific targets. Therefore, when buying from a dealership, it can be hard to navigate the pressure to pick leather seats, fancy rims, satellite radio, high-quality sound systems, and other options above the bare minimum. The more you give in, the more the new car will cost upfront.
Save on a Used Car with Hawthorne Auto Square
We are one of the largest used car dealerships in Los Angeles. There are hundreds of makes and models to choose from on our lot. Our high-quality, low-mileage vehicles are available at affordable prices. A buy here, pay here dealership, we finance auto sales with a variety of programs designed to meet your needs.
Don’t strain your finances to the brink by purchasing a new car. Browse our inventory online or visit us in person to see our latest deals. To speak with our knowledgeable staff, call 866-707-7664 today.