The average new car note is now over $700 – Dr Boyce Watkins

Let’s start by saying this: New cars are a horrible investment. They lose their value in minutes after driving off the lot and are horrifically overpriced. In fact, it would be safe to say that new cars are a wealth killer.

According to Edumunds, inflation is making the new car an even worse investment, as the price of a new car has now risen to over $700 per month. For those of you over the age of 35, you can remember a time when many of us paid less for rent.

Even crazier is the fact that 14% of new car loan payments are over $1,000 per month. About 18 months ago, that percentage was just 6%. So, times are changing, inflation is making life difficult and there is no end to the madness in sight.

Let’s be clear: There’s nothing wrong with getting a nice car. When my wife and I shop for cars, we don’t spend any time in the hoopty section. We get what we want and both of our cars are considered luxury.

But the one tradeoff we make when buying a car is that we never buy anything brand new. Instead, we choose a car that’s about three years old, since this knocks enough off the purchase price to keep us from feeling like we just paid for somebody else’s child to go to college (our own kids are enough for us).

So, balance is the key. Enjoy your life and enjoy your money. Just don’t sacrifice everything in order to impress strangers as you drive by with empty pockets.

Dr Boyce Watkins is a Finance PhD and founder of The Black Business School. To join The Dr Boyce Investment Club, please visit DrBoycePrime.com.

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