Three Problems I Solved By Buying a Brand New Car

Seeking advice on financing a new vehicle can be frustrating. Many financial experts simply say “DON’T DO IT!” While it’s true that new vehicles depreciate quickly—or, as they say, “as soon as you drive them off the lot”—millions of new vehicles are financed every year. So what gives? Are there that many people making bad financial decisions, or are the experts being short-sighted?

Any answer to that question will be an opinion, no matter who answers it. There are plenty of good reasons to buy a brand new car, and not all of them can be measured in dollars. Moreover, buying a new car can offer advantages over buying a pre-owned car if financing is involved.

I am a single, working mom. I buy everything I need used when possible, even my clothes, so I can use more of my money for the things my children need. When I first considered buying a brand new car it seemed excessive, but I discovered that it was within my reach. It also made sense for me, because it solved at least three big problems.

Problem 1: I Hated Driving.

Driving anxiety has been a major problem throughout my adult life. In my fifty-one years here on Earth, I have owned a dozen cars, all but the last pre-owned. My first car was a 1976 Toyota Corona (no, not a Corolla, a Corona) which had so many issues it only ran for a total of about two hours altogether, and left me stranded when it gave up the ghost in the middle of a busy intersection.

Perhaps because of that experience, I have always been plagued with anxiety by the slightest perceived tire vibration, engine rattle, transmission lurch, or exhaust hiccup that I imagine while driving. Driving anxiety is the pits. I've heard the expression "life is about the journey" a million times. When you have driving anxiety, you never enjoy the journey. You can't even enjoy the destination because all you can do is dread the drive back home.

I began thinking about buying a new car last year when it occurred to me that driving with my heart racing and my palms sweating day after day might be bad for my health. I began to consider possible solutions. Was it possible that driving a brand new car might eliminate at least some of my anxiety? It wouldn't hurt to find out, right?

So I set up my first new car test drive in a 2020 Chevrolet Trax. Believe me, there can a huge difference between driving a brand new car and a car bought pre-owned. New cars tend to have factory components, such as tires and brakes, that are higher quality and make for a smoother ride and (in my case) a soothed mind. I took the Trax along the route I drive every day, my commute to work and back. No sweating palms. No racing heart.

The elimination of most of my driving anxiety was huge enough. Now throw in a premium sound system, upgraded tech, and that new car smell. I had a revelation as I drove back to the dealership. Buying a brand new vehicle was self-care. It could solve a very real problem for me and dramatically improve the quality of my day-to-day life. I decided it was worth a closer look.

Problem 2: I Had A Disaster-Prone Budget.

As a single mom, I have no room for surprise expenses. Unexpected vehicle repairs or part replacements could put my finances, and my family's security, at risk. My pre-owned 2017 Chevrolet Cruze had a service contract financed into the loan, but it would expire after two more years of ownership. It also had a $100 deductible I would have to cough up if I used it. The new Chevrolet Trax I wanted came with a 3 year/36,000 mile bumper to bumper warranty that sounded very appealing.

For reasons you can guess, I don’t put many miles on my vehicles. I knew I would be well covered by the new warranty for the full three years. Then another revelation sweetened the deal. I realized that the balance on the remaining two years of my service contract would be refunded to the equity of my car’s loan if I traded it for a new vehicle. That sounded like a good thing.

Problem 3: I Had an Upside-Down Loan and a High(ish) Interest Rate.

I was well aware I was “upside-down” on my existing car loan, meaning that my car was worth less money than I owed on it. I knew that the refund of my financed service contract would help somewhat, and now I hoped that I could get a low interest rate to help me even further. I began actively pursuing the best deal I could get on a new vehicle, taking steps such as getting a trade appraisal and applying for financing.

After receiving a decent offer on my trade, I found out I qualified for a much lower interest rate, 1.9%, as well as additional rebates. I was paying 7.9% interest on my Cruze. I worked it out on paper, and lo and behold! My monthly payment would only go up by about $30 per month. Even more surprising was that the total amount I would pay over the life of the new loan would be just a few thousand more than the total amount I would pay (in principal plus 7.9% interest) for the Cruze.

Okay…I’m still a bit upside-down on my car loan. Financial experts would (rightfully) point out that buying a new car did not solve this problem. It did make me feel better about having this problem though. More of my money is going toward a great, reliable vehicle, and less of my money is going toward a higher interest rate and a financed service contract. I’m also enjoying a higher quality of life with less stress, which has enormous intrinsic value for me.

Does Buying a New Car Make Sense for You?

If you are still reading, you are likely considering buying a new vehicle. I suggest calling a dealership that sells new and used vehicles, and making an appointment to discuss your options. Make sure you speak to someone who “knows their stuff”—speaking to one of the finance managers or a new car sales manager can be especially helpful.

Be ready to inform the manager of all the factors that will apply to your potential purchase, including information about your trade. Some incentives may apply depending on your trade, such as cash for conquest makes or brand loyalty. Have your VIN and mileage ready. Call ahead to get your exact payoff if you still owe on your trade. You will need all of this information before you can talk about numbers.

Make a list of every question you have and write down the answers you receive. There is no such thing as a dumb question when it comes to your money, so don’t be afraid to ask! A professional dealership employee will spend ample time asking questions about your situation, will tell you all your options, and will answer your questions thoroughly. You should have a pretty good idea of what you want to do after the first conversation.

If you decide to buy new, I suggest you buy from an established dealership near you. If your local dealership doesn’t have the exact new vehicle of your choice, they can usually locate one for you quickly. Buying locally and establishing a relationship with your sales associate and their management team adds even more value to your purchase.

Buying close to home ensures the convenience of receiving local assistance after the sale, such as help discovering your vehicle’s tech features or dealing with documentation issues. The service department will keep good records of your vehicle’s service over the years, which helps to retain more of your vehicle's resale value when you decide to sell or trade. Buying a vehicle locally also keeps more of the money you spend in your local economy, which benefits you and your community.