4 Reasons to Consider Buying a Brand-New Vehicle

For the vast majority of consumers, buying a brand-new vehicle simply doesn't make financial sense.

That may seem like a strange way to start this article given its headline, but it's true. Remember, new vehicles not only lose an average of nearly 60% of their value over the first five years of ownership, but also often come with lofty monthly payments, higher insurance costs, and increased taxes and registration fees.

A few weeks ago, however, I stunned myself when -- for the first time ever -- my wife and I decided to replace our family's primary vehicle with a brand new one.

Specifically, after a few hours in our local General Motors (NYSE: GM  ) dealership, we happily traded in our '05 GMC Envoy for a shiny new 2014 GMC Acadia.

General Motors, Ford, and Chrysler are enjoying their strongest sales in years.

Photo courtesy of author

And I know we're not alone; General Motors just enjoyed its best November in more than six years, growing sales by 14% while largely riding on the success of its redesigned Chevy Impala and a warm reception for its full-sized Chevy and GMC trucks. Chrysler fared even better, boosting overall sales by 16% over the same period last year.

Meanwhile, though the folks over at Ford (NYSE: F  ) saw a softer 7% overall boost, sales of Ford's F-Series pickups grew a solid 16.3% year over year in November, exceeding 60,000 units for the seventh-consecutive month and building on October's respectable 13% gain. Moreover, Ford's Fusion sales skyrocketed 51% over last year, leading to what the company described as its best November since 2004. 

But don't get me wrong, I'm all too aware of the negative financial implications of our decision. This in mind, here are four reasons which ultimately compelled us to take the plunge anyway:

1. It might not cost much more than its used counterpart
At first, we actually started by looking at a comparable certified 2012 Acadia with around 26,000 miles on the odometer. However, the difference in monthly payments between it and the new model turned out to be negligible.

How's that possible? For starters, the 2012 didn't come with any of GM's incentives and, even with decent credit, the best used financing option available was a five-year loan bearing a 4% APR.

By contrast, the 2014 came both with a fresh warranty and over $2,000 in GM incentives. In addition, we were able to secure a five-year, 0% interest loan -- putting aside the opportunity cost of actually having that cash available to invest every month, it's sure hard to beat zero interest.

Finally, as a Costco member, I was also able to take advantage of the Costco Auto Program, which not only dropped the price at least as much as I would have been able to haggle out of the car salesmen myself, but also threw in a $500 Costco cash card to boot. (That said, I'm obliged to warn the cash card promo isn't always available.)

2. Your insurance premiums could decrease
If that wasn't enough, I was baffled to discover that my insurance premiums actually went down with our new vehicle.

And while even my insurance agent wasn't entirely sure why -- he said he ran the numbers three times to be sure -- note that there are several factors at play which can affect the cost of insurance, including the vehicle's value, type, and safety ratings.

As luck would have it, and despite its substantially higher value than our old Envoy, the 2014 Acadia boasts significantly higher safety ratings. Specifically, the Acadia scored an overall five-star rating in NHTSA tests, including five stars for both front and side crashes, and four stars in the rollover ratings -- the last of which I'm more than willing to accept as a byproduct of driving a crossover SUV.

3. Technological awesomeness
This brings up my next point: New cars are absolute technological wonders. Seriously, though, I'm in awe of all the gadgets, goodies, and performance enhancements that came with our new toy.

And I'm not just talking about the crazy center airbag which apparently inflates between the front passengers to prevent bumping heads, but also things like more responsive handling, better gas mileage, easier folding seats, forward collision alerts, anti-theft tech, lane departure warnings, blind spot indicators, clever ambient lighting, voice control, touch screens, parking assistance, rear cameras, the power liftgate -- the list goes on.

4. Because you want to
Then again, you could also wait a couple years to get the latest and greatest technology at lower cost. But that's also a great segue into my final -- and perhaps most selfish -- reason: Namely, that you might consider buying a new vehicle simply because you want to.

I won't lie -- my family could have gotten by without purchasing a new car. But the fact is that a part of us simply wanted to enjoy something which had never been owned by someone else -- a vehicle we could look forward to owning and maintaining for years down the road, all while resting in the knowledge that every dent, scratch, ding, spill, and any other inevitable imperfection happened on our watch.

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But I'm not going to kid myself; buying a new car isn't for everyone, and there's no shortage of superior options for putting your hard-earned cash to work.

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Read/Post Comments (7) | Recommend This Article (13)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 21, 2013, at 2:28 PM, luckyagain wrote:

    Thankfully someone buys new ones that will later be available for the rest of us.

  • Report this Comment On December 21, 2013, at 4:20 PM, catcherinthrye wrote:

    This article had absolutely no financial advice or recommendations.It could have been summed up in one sentence. I saw,I liked ,I bought.

  • Report this Comment On December 22, 2013, at 11:37 AM, freedom00 wrote:

    I am a GMC lover. Have had an Envoy and many other GMC products. However, until they pay the $10.1 billion or million they owe from the Obama Bail out, I will drive a vehicle built in a right-to-work state. Enjoy your Acadia, they are beautiful indeed, but what of what you paid belongs to the US Taxpayer, and being stolen by a Union.

  • Report this Comment On December 22, 2013, at 11:39 AM, freedom00 wrote:

    I meant: part of what you paid belongs to the US taxpayer.

  • Report this Comment On December 22, 2013, at 6:32 PM, TMFSymington wrote:

    @freedom00, Fair enough; and I'll be honest that's also part of the reason I personally own Ford stock and not GM -- but at the same time we're also loving the Acadia, as it meets our needs (read: "wants") better than any other vehicle. Was tough to not buy a product on principle when competing vehicles just didn't quite do it for us.

    Thanks for reading and Fool on!


  • Report this Comment On December 22, 2013, at 8:54 PM, 4mikie wrote:

    I bought a 2011 VW at a good price. Had everything I wanted and not much I didn't. Got 1% financing, and a 30,000 bumper to bumper warranty with free service for 30,000 miles. I could have bought one a couple years old, but the interest rate would have been much higher, limited warranty, etc. I'm still satisfied and the Jetta is really a great car! (my 3rd vw...wish I still had my "bug"!)

  • Report this Comment On December 23, 2013, at 5:57 AM, mrmedic1 wrote:

    I bought my 2009 Jeep Liberty new. I got a 0% finance 60K bumper to bumper and a lifetime powertrain warranty. She's a bit of a gas hog and the HP is low but I don't drive it far and its done what it needs to do in the crappy weather I've seen.

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