Is buying a nice car worth it? I’m torn, honestly. I bought my dream car (at the time) almost four years ago. I financed 100% of it too. Why? Because I was broke. When my car broke down on a road trip in the middle of California almost 2,000 miles from my home in Minnesota, I needed to think fast. I made the decision to trade it and buy a nice car. After all, I had a job and could afford the payments.
It was my second summer out of college and I scheduled a road trip from Minnesota to California and back with my brother and my friend. I had just enough money to cover the trip and continue to pay all my bills back home. When my car died in California, I lacked time and options when needing to make a decision. It happened on the Thursday before Memorial Day Weekend. I had one day, Friday to make the decision to fix my car or buy a different one. If I didn’t make the decision that day, we would have all been stuck in Fresno, California until at least the following Tuesday.
I decided to not fix the car and instead, trade it in. Once I started looking at the available cars, I quickly noticed that I didn’t like any of them. After surfing many car lots in the area, only one car was anywhere close to what I wanted, and it was not even one year old. To make a long story short, I bought it. We all left for the 2,000 mile trip back home later that same day.
When I got back home and back to work, I decided that I didn’t want to keep that car, but instead trade it for something that I would really like, since I would be paying it off for a long time anyway. This is when I traded that car for the one I have now, which was $4,000 more than the California car. Double ouch. I upgraded a car that I already shouldn’t have bought in the first place.
I financed $20,000 for the car, including all the baggage of the other car, and the other car before it. Someone else probably could have bought it for $19,000, but I had the car baggage, so I wasn’t so lucky. That was in June, 2008 and the car, a 2007 Pontiac Grand Prix GT, had just over 19,000 miles on it and was in almost brand new condition. The car was awesome!
Let’s fast forward four years now and take a look at its value. According to Kelly Blue Book, it’s now worth about $12,000 if I were to sell it on my own. For the record, it has only 54,000 miles on it.
$20,000 – $12,000 = $8000 drop in value
Ouch. I lost $8,000 or 40% of the purchase price of the car in four years and the value continues to drop.
My Thoughts, Financially
You know, financially, I don’t see any positives of owning this car, or any nice car for that matter. It is simply a very expensive thing to acquire and its value drops like a rock. You may say that nice cars are reliable, but that’s only somewhat true. My car has spent its fair share of time in the shop in the last four years. I almost know everyone there by name at this point.
My Thoughts, Personally
I love my car. It’s got all the bells and whistles. It has leather, heated seats, a 6 disc changer, digital temperature control, a power sun roof, a remote starter and a supercharged engine. I absolutely love it and it drives like a sports car. Even with that being said, do you know how many times during my race out of debt that I thought about selling it? Probably weekly for two years or so.
Today, It’s Just Another Important Lesson That I Learned
Now that I’ve been working hard on my personal finances for a couple years and have managed to get out of debt and get ahead, I can enjoy my nice car, finally, without feeling pressure to sell it. It’s not as hard seeing its value drop when I know that I can turn around and buy another one in cash at any time (although I probably wouldn’t). If I had to do it all over again, I would buy MUCH cheaper. If I was car shopping today, I would even buy cheaper. I guess being a financially smart adult, I don’t value the joy of driving a fancy car as much as I value hard earned cash in the bank. I didn’t always think this way (ask my family and friends). I used to love buying fancy things. I’ve grown up A LOT in these past four years. Having money saved gets me excited for my future, where as the fancy car dropping in value makes me sick to my stomach. Big difference there.