Marc Linsky CFP discusses why he will not buy a brand new car again.
A brand-new shiny car is something many of us dream about or may have even purchased. The smell of a new car’s leather interior is something that gets people excited. However, Marc Linsky says he will never again buy a new car. “I love the smell of a new car interior as much as anyone else,” Marc says. “But it’s not something I’m willing to pay thousands of dollars for.” Here, he talks about why he made this decision and what led to it.
The reason is simple, he says. As soon as you drive off the lot, you’ve lost money. It’s probably one of the worst financial decisions you could ever make, he says. With the average car in America depreciating between 20% and 30% the year alone, it just doesn’t make sense to do this, Marc says. Besides, most cars lose value in the range of 18% a year after the first year. “Of course, it depends on the car,” he adds, “since some cars hold their value better than others.”
You won’t see the effects of it until you sell it later, Marc explains. He says if you were to buy a new car for $30,000, for example, you could expect it to depreciate about 50% by the end of the third year. “You’d be buying a $30,000 car, and if you sold it at the end of the third year for $15,000, that means it just cost you $15,000 in depreciation,” he adds.
Marc Linsky of Estreet Financial Continues
On the other hand, if you buy that same $30,000 car but wait until it’s three years old, it’s only going to cost around $15,000. When you sell it after using it for three years, you’ll probably get around $10,000 for it. That’s means you’ve only lost about $5,000, Marc says.
This shows the smarter solution is to buy a car that’s one to three years old, Marc Linsky says. If you must have that new car smell, even a few months old is better than a new car, he adds. “Let someone else lose that depreciation that occurs during the first six months,” Marc says, “then you can come in and get a practically brand-new car for thousands less.” Marc recommends using calculators like Kelley Blue Book’s five year cost to own or Edmunds’s true cost to own to find how much specific models usually depreciate. Nowadays, you can get a car that’s one year old that looks brand new, he adds.
“Bottom line,” Marc says, “is I recommend buying nothing newer than one to three years old. You’ll be able to get the car for about half of the new price.” The average person buys 13 cars over his lifetime, according to the National Automobile Dealers Association, Marc Linsky says, with each costing approximately $30,000. This means if you buy all your cars at 3 years old, you’ll be literally saving thousands of dollars over your lifetime – thousands that could potentially go into creating your ideal nest egg for retirement.
About Marc Linksy CFP
Marc Linsky CFP is a certified financial planner and the President of Estreet Financial, a financial investment firm specializing in retirement and financial planning with particular focus on those in the medical professions. He holds the CFP certification, which is recognized as the standard of excellence for the financial planning profession and has been helping people with their financial, retirement, and estate planning since 1986. Marc holds a bachelor’s degree in Marketing and Economics from Penn State University. He has been married 33 years to his wife, Molly, and has 3 grown children and 2 grandchildren. Estreet Financial has offices in New Jersey, Florida, and New York.