Buying A New Car Is The Worst Decision Ever, Says Financial Guru

Even though there’s nothing like sitting behind the wheel of a brand new car, some people feel they are just not worth the money.

Among those is self-made millionaire and bestselling author David Bach, who told CNBC that nothing we do in our lifetime is as wasteful financially as buying a new car, stating that “it’s the single worst financial decision millennials will ever make.”

His reasoning is that as soon as you drive your car off the lot, it immediately begins to depreciate, typically decreasing in value by 20 to 30 percent by the end of the first year, and in five years, you’re looking at a drop of 60% or more.

The worst part is that “most people borrow money to buy that car,” says Bach. “Why would you borrow money to buy an asset that immediately goes down in value by 30 percent?”

His solution? Buy a car that’s “coming off a two- to three-year lease, because that car is almost brand new and you can buy it at that 30 percent discount.”

Back also recommends that we think about new car costs on a yearly basis. “Here’s how the car companies get you: They want you to focus on monthly payments. And they’ll get those monthly payments down to you where you can afford it. Don’t think about monthly payments. Think about annual payments. Think about the entire term of the loan.”

He goes on to say that “if you’re spending $500 a month for that car, well, that’s $6,000 a year, not including the car insurance or the gas. That could be two months or three months of your income. Run the numbers and then ask yourself: Do you really need a car that nice or could you buy a car that’s less expensive – maybe a little older – but still looks good and still runs?”

Then there are other financial experts such as Shark Tank star Kevin O’Leary, aka Mr. Wonderful, who doesn’t even want to hear about owning cars.

“I use my phone to call Uber or Lyft, and they take me around the city. I save a fortune. I feel good about it,” says O’Leary, before adding: “I hate cars.”