Financial Literacy
For Your Future



Should I Buy A Car (New Or Used)?

The decision to buy anything of substance is an important one and needs thoughtful consideration of many factors. As you have probably already seen, no application is discrete. Every financial application links to some degree to many others. Deciding to buy a car or not is no exception. As you review this application and work through the decision making guide, remember to look through the list of applications and focus on those that can add to the car buying choice. What should I buy on credit?Should I purchase insurance?, and Should I focus on creating and living on a budget?, are some of the applications that could be helpful as you think about a “new set of wheels”.

This story begins with a brisk and rather long walk to work. Yes, you are now employed and it looks like going to school and graduating has finally paid off. After many months of searching for work and filling out job applications, you now have a full time job with benefits! The salary isn’t what you wanted or expected, but it is a start and gaining work experience has value. In addition, the job is relatively close to home and walking is time consuming, but possible.

As you walk through your employer’s parking lot (by the way parking is free for employees), you are struck by all of the nice newer cars in the lot. Quickly you recall a promise you made to yourself a long time ago. The promise was that as soon as you graduate and get a full time job you would buy a new or, at the very least, a great used car. This car would have eye appeal, a sun roof, a spoiler, and leather interior with climate controlled seats. Oh yes, a great sound system and other high technology options. 

An interesting thought as you enter the building to begin a real job. The first day went well. Nice people, a great orientation, and your desk is close to a window with a view. At the end of the day, you prepare for the walk home and the window with a view pictures dark clouds and very heavy rain. No, you didn’t bring a raincoat, umbrella, or boots. As you head toward the exit door, you hear someone saying “hey rookie, need a ride?” You turn and see a co-worker-the one that gave you your orientation-gesturing to the parking lot. That is an easy question to answer as you look at the typhoon outside.

The stage is set. The co-worker’s car was close to exactly what you had dreamed of, and the trip home was quick and dry. Perhaps some info gathering on the internet should be tonight’s recreation. It is just looking you say to yourself, what can it hurt.

Surprise, you found several cars that fit your criteria. A bit pricey, but your credit is good and you have a few bucks in the bank. You are one of the lucky college graduates-you have no college loans. You decide to go to the lot and take a look, kick some tires, and take a few test drives. After several days of seriously shopping around, you pick three cars (one new and two barely used) that would really work for you. 


It is time for the decision making guide. Buying a new or newer car is a big decision. It is complex, personal, and has long term consequences that are both positive and negative. Many young newly employed people will tell you that buying a new or newer car at this stage of their life was the beginning of financial stress and problems. Others, on the other hand, would say it was the best thing they could have done. Consequently, thoughtful and structured deliberation is mandatory if you are to build rather than destroy your financial future and net worth.

Given the magnitude of this possible choice, you must plan on spending a great deal of time with the guide. It is not easy to complete if you take it seriously and because the focus is on YOU, it is impossible to just follow what someone else has done and know you are doing the right thing. Although it is not imperative, writing down your ideas regarding this decision as they relate to the guide’s direction will be helpful. Keep these ideas with the many automobile brochures you have collected. There are just too many factors to consider and remember. In addition, be sure to focus your thinking on the now and the future time horizons. Much of your thinking about cars has been done in the past. Don’t let these old emotions or goals keep you from using a more mature perspective that evolves from schooling, a full time job, and a desire to have a good life over time. Did you get wheels or not?

Applications Insights Guide - click here for facts to aid your decision making process

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