Car magazines have you right where they want you.

From the moment you open the front cover, you’re treated to a bevy of beautiful – if not downright sexy – vehicles, all promising to give you the best ride of your life. Many of us can’t help but succumb to temptation. Who wouldn’t want to drive a brand new car? 

The problem is that buying new isn’t the smart move – at least not financially. The reason for this comes down to the way that cars lose value over time. 

THE PROBLEM WITH DEPRECIATION

When you buy a new model, you’re effectively shouldering all of the costs of the vehicle. You pay for the labor, materials, tax, and the new buyer premium – the fact that most regular people would prefer to own a new model if they can. 

The trouble, though, is that new cars have a nasty habit of losing about 10 percent of their value every year. When you buy a brand new Toyota instead of, say, a used Ford Edge, you’re automatically taking money off the table.

As a general rule of thumb in life, you never want to invest in depreciating assets if you can help it. The way to build wealth is to hang onto things that will be worth MORE in the future. Traditionally, people did this by buying promising companies, vintage wine, works of art, and gold. It put them on an upward spiral of ever-increasing returns that radically improved their quality of life. 

You need a car to get around and live your life, so you have to accept some depreciation. But you can slash the amount of money you lose if you choose a second-hand vehicle. It’s just basic economics. 

HOW TO CONVINCE YOURSELF THAT USED CARS ARE BEST

If you struggle to see yourself buying a used car, try to remember back to when the vehicle was new and all the rage. Think about how desirable vehicles were in the past and put yourself in the shoes of your younger self. You’ll usually discover that the only reason you want the newer model is that your expectations have changed, not your needs. 

You don’t have to choose a car from ten years ago to find a bargain. Just going back a couple of years can net you massive savings. Plus, you can often get a vehicle that is so similar to the latest version that nobody can tell the difference anyway. Dealerships do an excellent job of valeting your car to make it look as good as new. 

So what’s the conclusion here? Mostly, it’s this: if you want to keep your motoring costs down, go second-hand and buy a robust brand from a reputable dealer. Here, you can take advantage of lower prices while also sidestepping maintenance issues that could crop up if you went to a private seller. You can also often afford to buy a far more luxurious vehicle than would be possible if you insisted on buying brand new – a great way to elevate your status.