Personal Finance

I knew I would lose 10% immediately and would only continue to lose more … and bought it anyway

If you haven’t already figured it out, yes, I am talking about a brand new car. It’s a well-known fact that cars are the worst “investment” you could possibly make (unless you’re somehow using your vehicle to make money). Depending on the source (and the vehicle), your car will lose 10% of its value the second it leaves the dealership. And it only continues to depreciate in value until it reaches its final resting place (i.e. the junk yard). And let’s not forget all the money you pour into it for maintenance, insurance, gas, repairs … Over it’s lifetime, you’re probably definitely spending far more on maintaining the car than you did up front to acquire it.

Knowing this, I always swore I would never buy new. 4 years old, sure. 1 year old even, sure. But brand new? No thank you. I was much too smart to throw that much money away in such a poor “investment” decision.

And then, last summer, I went against everything I had sworn against for so many years.

So what changed?

Last year, we started looking at new cars. We both drove two old hatchbacks, one 11-year old and one 10-year old. Since we both worked at the same office at the time, we had decided that after the wedding, we’d sell both our cars and get one new car.

2013-nissan-altima-interior-redWe went back and forth on vehicles for awhile. Do we get a nice sporty coupe while we can, before we have kids? Do we get a nice sedan that will be a decent family car? Do we go straight to the SUV now? I was so set on the Altima coupe – black exterior, red leather interior… how could I resist?! Then we drove the Maxima, and that just was such a luxurious drive. Or what about the Accord coupe?

Deep down, however, we knew that test driving was all fun and games, but none of those made any sense for us. We planned to have kids at some point in the future, and a bad investment would only be made worse if we had to sell our sporty car to get a more family-friendly one. As soon as we got Kaiser, we just knew the answer – it would be nothing but an SUV for us.

But why new?

Two main reasons: 1) Fuel efficiency and 2) The features we wanted were only offered in that year’s brand new, totally redesigned model. A 3rd but smaller reason: Financing.

We live in Canada, and winters can get pretty harsh, so it only made sense to get an AWD vehicle. So off I went to check out fuel efficiency ratings. SUVs and AWD are notoriously bad for fuel efficiency, so imagine my surprise (and delight) when I discovered something crazy: The 2014 AWD SUVs had better fuel efficiency than my 2004 hatchback!

The 2013s were nowhere close because only the 2014s had been totally redesigned, and the newest model offered something quite unique for the compact SUV class – 7-passenger seating.

I was sold. Best in class fuel economy, PLUS 7 passengers, PLUS very attractive to my eye? What more could I ask for?!

exterior-03I spent the latter part of 2013 anxiously awaiting the 2014 Nissan Rogue’s release, then the early part of 2014 convincing the Mr. that this was the car for us, then the next few months waiting for sales. Of course, I wasn’t the only one that realized how great of a vehicle it was – they were flying out the doors, so month after month, they offered promotions on almost every other model except the one we were waiting for. Of course. But that just served to reaffirm our decision.

Finally, in the summer (after we realized that Kaiser’s growth of 4 pounds per week was quickly going to necessitate a much larger vehicle), they ran a promotion.

Although we had had the cash at the time to buy the vehicle outright, financing rates were low (1.99%) and the first two months’ payments were covered, up to a maximum of $450. I figured at 1.99% and with $900 off, it made more sense to finance the vehicle and invest the money. I was pretty sure that it’d grow more than 1.99% over the 5 years. We financed the car over 5 years and put enough down so that our monthly payments would be exactly $450. (In contrast, resale vehicle financing rates were 6-8%.)

It’s been just over a year now so we’ve had plenty of time to evaluate our worst investment decision yet, and I must say – I love it so much, I’m 99% sure I will be making the exact same bad investment decision all over again when we need a second vehicle, except maybe in red this time 😉

Thanks to MyCountdowntoFreedom’s post on cars for reminding me to post this topic!


4 thoughts on “I knew I would lose 10% immediately and would only continue to lose more … and bought it anyway

  1. You know what, I totally get the need for fuel efficiency. My old car was a gas guzzler. It was terrible. With my new leased car, I’m getting 26 -28 mpg city driving, over 30 highway. My old car? Like 18! Great post, I like the different perspective!


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