When buying a new car out of want instead of need, buyers remorse will eventually come between you and the love affair with your vehicle.
Like many Americans, I made a foolish mistake of leasing a brand new vehicle right out of college. I had just landed that first real job, and for the first time in my life I had some money, not just a couple of hundred bucks that I had saved from a summer job to buy “back to school” clothes, but a strong steady income from a new career in the upstream petroleum industry.
One of the greatest temptations as we transition into our new roles as working adults is to go out and buy a new car, we deserve one right? Mom and Dad have new cars, and we expect to have one as well. What we often forget is that mom and dad have worked 20+ years to attain the lifestyle that they currently enjoy. With this in mind, the impatient ones among us (myself included), go straight to the new car dealership and pick out the perfect vehicle that we believe will make us a big hit with the opposite sex. We take advantage of the no money down financing, first time buyer hype, or special lease incentives, and leave with our new prize.
The first few months with your new vehicle are euphoric, you find yourself taking needless trips just to be seen in your cool ride. You spend a fortune on cleaning and waxing your vehicle to remind everyone how nice your new vehicle is. The vein among us may even take multiple “loops” around the parking lots to find the perfect high profile parking spot to get the maximum amount of “look at me” (see if you can spot these people next time you are in a busy parking lot). Unfortunately, as time goes by, the excitement of our new vehicles begins to diminish. By now, every one of your friends and family members has seen your ride, and eventually there are few people left to impress. But wait a minute; we still have 3, 4, 5 or 6 more years left to pay on our vehicles.
In my particular case, I was paying over $430 a month for a 48 month lease. When I assumed the lease, I remember justifying the purchase thinking “wow, I can drive a brand new $33000 Toyota 4Runner for $430 a month”. Using the same logic, I failed to consider that the next year, I would be paying $430 a month for a one year old vehicle, and each year thereafter I would still be paying that payment but the vehicle will be another year older. To make it worse, since I had leased my vehicle, I would have to give the vehicle back at the end of the loan term. Eventually, I came to the realization that those “low” initial payments were coming back to haunt me, and that the car companies will always get their money in the end.
Protect yourself from buyers remorse during your next vehicle purchase.
1) Buy a car that fits your life now, and any changes that may occur in your life in the perceivable future (larger family, job requirement, etc).
2) Paying cash for cars is best, but at a minimum, put enough money down so that you’ll never be “upside down” in your car (owe more than it’s worth). A 25% down payment on no more than a 48 month loan should protect you from this.
3) Lastly, and most importantly, try to look at vehicles for what they really are, a means from getting from point A to point B. Learn from my mistake and don’t buy or lease a new car looking at initial monthly payments, and the belief that the car will make you “cooler”. Doing so will always cost you more in the end.
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“One of the greatest temptations as we transition into our new roles as working adults is to go out and buy a new car, “
I think a good job and a new car goes hand in hand.
Then comes the buyers remorse sinks in after about 2 years,
Now you are so deep in other consumer debt, we spend the rest of our lives getting out the hole and it too hard to change our habits by then