Financial Literacy
For Your Future



Should I Buy A Car (New Or Used)? - Insights Guide

Questions related to buying a car are common to most people, not all, and need to be given a great deal of thought. Automobile purchases are not like buying other durable goods as they are huge ticket items that come with a variety of related expenditures in order to stay safe, reduce risk, and complete routine maintenance.  Fortunately the decision making process gets easier over time as your experience grows and unfortunately, if this is your first time thinking about an automobile purchase be ready to invest a lot of time and thought to avoid common pitfalls that can affect your personal/financial life for quite some time.

Application Insights-Should I Buy A Car (New Or Used)? is not to be viewed as an answer sheet of how you should think or value things. It does represent a selected list of possible insights that many people may have as they tackle this possible choice making case. Remember that decision making is a personal activity and it is all about you. Your responses to the guide’s questions and activities are yours. Although a personal decision, as the guide suggest, help from other people who have lived through the thought process already or are doing the same thing you are can be helpful. Experience is a great teacher so let others share theirs with you. You will be amazed how often talking with others will remind you of something very important that you have failed to think about.

The result of following the process as described in the guide will give you the confidence that you have considered the important factors and blended them into being you.

  • The obtaining an automobile question is huge. It is complex and can relate to so many other important factors in your life from recreation, work, safety, location of your home, empowerment, etc. Be sure to complete the context and know what your question about buying a car is all about. For some people, buying a car is just about transportation. For others it is much more including building self worth.
  • Buying a car is a longer term decision. People usually will live with the benefits and costs of their decision from five to ten years. Look carefully at your lifestyle choices over time and determine how they fit or don’t fit into having a car. If your work will be easier with a car or if your homes location makes automobile ownership a necessity, the balance may drop in favor of not only buying a car, but also what type of car (new or used, high gas mileage or luxury). If, however, you see as car as a luxury that will not be used often, the costs may be too great and they will keep you from doing other things that you value more. Keep in mind that the costs of automobile ownership go far beyond the price of the car or the car payment if that is how you choose to pay for it. Insurance, upkeep, gasoline, and parking are a few of the related costs. Another cost that is often forgotten is the opportunity cost of the money used to buy and keep a car. Remember, opportunity cost is the value of the next best alternative and that could be the investment potential of a $25,000 car plus upkeep for a lifetime. Depending on the cost of the car and the investment alternatives you have, $25,000 invested as a retirement fund could be well over $200,000 when you retire.
  • The long term investment potential highlights one very important alternative that you should consider before making your decision. Alternative transportation devices should also be identified and considered. Buses, subways, metro trains, bicycles, motorcycles, friends, walking can all move you from point A to point B. 
  • Each of these has expected benefits and expected costs as well. Another alternative that many people have selected is changing location so their home is closer to the things they value. This may seem silly, but if moving was already on the radar screen, it should be considered.
  • Once a long and complete list of alternatives has been developed, a very thoughtful determination of the expected benefits and expected costs of each alternative must be done. Don’t forget that expected benefits and expected costs are not just about money. State of mind or happiness should also be factored in. If finally buying your dream car and showing it off to your friends gives you a great deal of personal satisfaction, that needs to be counted.
  • As mentioned earlier, this is an application topic that can gain a great deal from the input of others. People feel strongly about their life’s decisions and they will give you insight and their sense of passion regarding their choices that will help you make yours.
  • So what will it be? Are you going to be a proud owners of that new SUV or sports car or mini-van or perhaps a good used one is best because it will give you benefits in more than one area. Oh! You are not sure and you don’t want to have consumer remorse after only two years-maybe renting or leasing is a better choice.


1) Tips For Buying A Car.
2) How To Buy A Car.
3) New And Used Car Buying Guide.

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