5 Reasons New Cars Can Be a Bad Investment - Avoid the Financial Pitfalls!
5 Reasons New Cars Can Be a Bad Investment - Avoid the Financial Pitfalls!
Posted on April 6, 2025
A shiny new car might feel like a reward. It smells good, drives smooth, and makes you feel like you’ve made it. But beneath the surface, a brand-new car could quietly sabotage your financial future. With rising costs and a shaky global economy, now is the time to think smart—not shiny.
Here are five reasons why new cars are a financial trap and what you should consider before driving one off the lot.
1. Depreciation Hits Hard—and Fast
The moment you drive a new car off the dealership lot, it loses value—about 10% instantly. Over five years, a new vehicle can depreciate by up to 63%, leaving you with a car worth only a fraction of what you paid. It’s like watching your money melt, much like ice cream on a hot day.
In contrast, a certified used vehicle depreciates more slowly, often just 5–10% per year, especially after the first few years. That makes used cars a far smarter long-term bet.
2. You're Borrowing Money for a Losing Asset
When you finance a new car, you’re not just paying for the vehicle—you’re paying interest on something that loses value every single day. This creates what experts call a “financial triple threat”:
- You're in debt
- You’re paying interest
- The car is worth less each month
Even worse? If the loan term is long, you might owe more than the car’s value, leaving you stuck. On the other hand, used car financing, helps you build or improve your credit score with consistent, timely payments and can open you up to a wider selection of vehicles, potentially allowing you to afford a newer or better-equipped model than if you were paying entirely in cash.
3. Leasing Isn’t a Shortcut
Some people think leasing protects them from depreciation. But in reality, you’re still paying for that depreciation—it’s just baked into your monthly lease payment. Plus, you don’t own the vehicle at the end of the term.
Leasing might keep your payments low upfront, but it offers little to no financial benefit in the long run.
4. Buying Used = Smart Savings
Let's compare; buying a brand-new car for $20,000 vs. a reliable 5-year-old model for $7,400. The contrast could save you hundreds of dollars per month. If you invested that saved money instead—say, around $300/month—you could build up over $400,000 in 35 years with moderate returns.
Sure, you may miss out on the latest tech features in a used car. But in return, you get to own an asset that’s already taken the big depreciation hit, and you avoid being tied down by a high monthly payment.
5. Long-Term Peace of Mind
Used cars today are more reliable than ever—especially certified pre-owned ones. When you buy smart, you avoid paying top dollar for short-term luxury and start building long-term wealth instead. And with today's economic uncertainty, smart choices like this can help you stay ahead of increasing living costs.
Plus, used vehicles often come with lower insurance rates, lower taxes, and fewer surprise costs.
Is New Worth It in Today’s Economy?
Let’s be honest—buying a used or certified vehicle means compromising on the latest features. But what you get in return is far more valuable: financial freedom, less debt, and smarter choices in a time when every dollar counts.
Reserve a Used Vehicle at the Best Price in Ottawa!
Explore certified and used vehicles that fit your lifestyle and budget at Myers Car Canada in Ottawa. As one of the region’s top used car dealers, we help you drive smarter, not spend harder. Reach out today to find the perfect used car for your next step.
Explore Used Inventory!