Car saleswoman shows catalog to buyers. Young couple chooses a new car

Why You Shouldn’t Buy a New Car if You’re Under 25

So you just got your first good-paying job? Props! I know what you are thinking – it’s time to get a brand-new car. Well, if you are 25 years old or younger, buying a new car shouldn’t be on your list of things to spend on your new-found source of income. Why not? It’s decent pay, after all.

For most modern adults, getting a car today isn’t a luxury but a need. Getting around the city at your convenience can be hectic and expensive, especially if you don’t have your own means of transportation. Yet, getting a brand-new car at 25 years old (or below) is considered a financial misstep.

Here’s why. At two and a half decades old, you have more to lose purchasing a brand new car than gain—especially if you haven’t saved for the payment or built your credit.

New Cars Lose Value Fast

car dealership negotiation
Image Credit: Prostock-studio/Shutterstock.

From the moment you make that left turn out of the dealership, your brand-new fancy car is losing value. According to industry experts, new cars lose between 20% and 30% of their original value in their first year of sale.

According to AA (Automobile Association), new cars will lose 40% of their residual value in the first three years, keeping in mind they rank up to 10,000 miles per year. Simply put, your new car will, on average, lose 20% of its value every year. 

Less Value for Your Hard-Earned Money

Portrait of serious male client talking to professional car dealer in business suit in dealership discussing automobiles looking at luxurious new model. Concept of choosing and buying new auto.
Image Credit: Shutterstock.

Most rational adults budget before they spend. It’s Finance 101. One of the benefits of looking at the used car market for your new car is that you get more benefits from your hard-earned money.

Buying a brand new car for $25,000 is a good bargain, but when you consider the used car market, there are a multitude of options for your price range that offer more value.

Therefore, instead of spending $30,000 on a 2024 model, you can spend the same amount on an older (4 or 5 years), fancier, well-maintained model.

Older Cars are Reliable

Cheerful female client of car dealership smiling and looking at camera while sitting inside new red vehicle
Image Credit: Max kegfire/Shutterstock.

This might spark a huge debate, but think about it. Older models are sometimes more reliable. Newer models are often subject to recalls in their first year of sale due to issues the manufacturer might have overlooked during production (new car teething problems).

Older cars have a recorded history from owner reviews, which makes it much easier to know what models to buy and which ones to avoid. A good rule of thumb when buying a used car is to ask for its maintenance records.

Responsible car owners keep detailed records of regular maintenance service, repairs, and replacement parts charges.

High Interest in New Cars

african couple getting car key from car dealer in showroom and signing contract
Image Credit: Shutterstock.

A lot of new car owners get trapped in the pitfall of confusing affordability and being faithful to monthly car payments. Most people will rush to get a fancy car they know they can afford rather than purchasing a reliable vehicle they can pay for fast and hassle-free.

According to a recent Bloomberg report, US auto loan delinquency rose 2.66% in the third quarter of 2023, above pre-pandemic levels. Worse, with car buyers unable to make payments on new cars, lenders are tightening their standards, further heightening the risk for young buyers. 

High Insurance Rates

Salesman guiding customer seated at table. Car business. Car sale. Dealership closing. and the new owner has entered into a contract The idea of ​​selling and renting a car with insurance.
Image Credit: SaiArLawKa2/Shutterstock.

It goes without saying that a newer car will rack up more insurance charges than a used model. Simply put, the more expensive the car you are looking to buy, the more premiums you’ll pay.

Since used cars are much cheaper, it’s easier to buy them outright and, in some cases, even skip collision insurance (there is less to lose with an older car), amounting to a lot of savings.

Also, at 25 years old, you are likely to pay more insurance than a seasoned driver. Statistically, young drivers are more likely to have accidents. 

Humphrey Bwayo

Author: Humphrey Bwayo

Title: Writer

Bio:

Humphrey Bwayo is an automotive journalist whose love for cars has extended into collecting, driving, and writing about automobiles. His first interaction with cars was with a BMW E36 M3 toy car he got for his 5th birthday, and, as the saying goes the rest was history. 

Growing up as a 90’s kid, he experienced firsthand the height of the great East African Safari Rally. He watched local legend Ian Duncan scoop titles in his Toyota Celica Turbo 4WD and Group A Subaru Legacy RS.

He was fortunate to attend journalism school and later work for a local news broadcaster before diverting into digital print. He’s enjoyed an illustrious career writing and editing for websites like National Monitor, The Clever, Columbia Observer, Gadget Review, Hotcars, TheDrive, and Autoevolution. 

He’s now found a home as a contributor at Tesla Tale, an extraordinary team of automotive journalists, experts, and car enthusiasts curving out new ways unseen on the interwebs of telling car stories — stay tuned!

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