New Car Purchase

I am in the process right now of evaluating a vehicle purchase. Contrary to advice I've received for most of my life, I am considering purchasing brand new rather than used. All my life, I've heard this off the cuff mantra from parents and others that a vehicle loses 25 percent of it's value the moment you drive it off the lot, and therefore purchasing a vehicle new is a big waste of money. While it's certainly true that purchasing any vehicle is an investment in a depreciating asset, if you look at the available numbers (Kelly Blue Book), 25% is obviously inflated, especially for a vehicle like the base model Hyundai Tucson, which is the car I'm zeroing in on. For the Tucson, it looks like average depreciation is in the range of 15-16% the first year, 9% for the next two years, and then anywhere from 14% to 18% after that. For my purposes, I'm assuming a depreciation charge of $190/mo for the first five years, which would be the likely length of the loan. Assuming a purchase price of $19,500, I will be left with an asset worth approximately $8,100 when the loan is paid off. I might even be able to get a better price than that if the factory rebates come through soon.

An alternative to the Tucson would be to get another used Civic. There is a vehicle on Auto Trader right now that I test drove once and it is truly a screaming deal. It's a 2007 with 23,000 miles and it's in absolutely perfect condition. The owner is asking $12,900 for it, which is just about 2K under Blue Book. It's a really sharp looking car too.

I keep going back and forth on this. On the one hand, the Tucson would be really awesome. But is it the best spending decision right now? The Civic would obviously be more optimal from an expenditure standpoint, but how much happier would I be driving the Tucson than the Civic? Also, it's not like buying a base model Tucson would be an outrageously irresponsible spending decision. Quite the opposite in fact. But, I need to remember that cars pretty much never make sense economically. They are, ultimately, just transportation. But, I LIKE driving, probably much more than most people. I love love love the freedom that my car gives me. I enjoy that it is truly my space. No roommates, no mother, and no sister. And, if I do need to transport people, the Tucson is far and away better - the backseats in the Civic are actually kind of a joke.

The Tucson also does more to communicate an image of prosperity, which may not be the most important thing, but is also not inconsequential to personal goals that I have recorded elsewhere.