Is buying used always smarter than buying new?

Question

Rich Dad · Accepted Answer

“Used vs. new isn’t about price — it’s about whether you’re buying an asset or a dopamine hit.”
Let’s get something straight: buying used is often smarter — but not always. The real question isn’t new or used? It’s: Is this thing making you richer or poorer? A brand-new car loses 20–30% of its value the moment you drive it off the lot. That’s not transportation — that’s a financial faceplant. Meanwhile, a 3-year-old car with 30,000 miles might cost 35–40% less and deliver nearly identical utility. That gap? That’s investment capital. If you invest that $10,000 difference at an 8% annual return, it grows to over $21,000 in 10 years. That’s opportunity cost most people never calculate.
Now let’s talk assets. If you’re buying equipment for a business — say, a $50,000 truck for a landscaping company — new might actually be smarter. Why? Warranty, reliability, tax depreciation, lower maintenance downtime. If that truck generates $150,000 a year in revenue, who cares if it’s new? That’s a tool producing cash flow. Same with laptops for a coding business or machinery in manufacturing. When new increases income, it’s leverage — not luxury.
But for lifestyle purchases? Used usually wins. Furniture, gym equipment, cameras, musical instruments — these often depreciate 40–60% in the first year. I’ve seen people furnish entire apartments through resale marketplaces for 70% less than retail. The previous owner paid the “new tax.” You collect the discount. Wealthy people love letting someone else absorb depreciation.
Now here’s the nuance: sometimes buying cheap becomes expensive. A $3,000 used car that needs $2,500 in repairs within a year isn’t a bargain — it’s a headache subscription. If unreliability causes you to miss work or waste time, that hidden cost matters. The same goes for buying used tech that’s outdated in 12 months. Smart buying isn’t about saving money — it’s about maximizing value per dollar.
Here’s the rule I live by: Buy new when it increases income, reliability, or leverage. Buy used when it’s a consumption item that depreciates quickly. And never buy either unless it fits your cash flow strategy. The wealthy don’t obsess over “new vs. used.” They obsess over “return vs. cost.”
If it puts money in your pocket, new can be brilliant. If it drains money, used is just damage control.

Poor Dad · Answer

“New things smell nice — but debt smells worse.”
In most cases, yes — buying used is financially smarter, especially for big-ticket personal items. The most obvious example is cars. A new vehicle typically depreciates 20–30% in the first year and around 50–60% within five years. That means a $40,000 car could be worth $20,000 in half a decade. If you instead buy a reliable 3–5-year-old car for $22,000 and drive it for 8–10 years, you significantly reduce depreciation costs. That savings can go toward retirement accounts, emergency funds, or paying down your mortgage.
Let’s look at electronics. A brand-new smartphone might cost $1,200 at launch. Within 12 months, the same model often sells used or refurbished for $700–800. Functionally, it does the same tasks — calls, email, apps. If you upgrade every three years instead of annually, you could easily save $5,000–$7,000 over a decade. That money, invested at 7%, could grow to nearly $10,000–$12,000. Small differences compound.
However, there are times when buying new makes sense. Appliances with warranties, energy-efficient HVAC systems, or items tied to safety — like car seats or certain tools — may justify buying new. A new refrigerator with an energy-efficient rating could save $100–150 per year on electricity. Over 10 years, that’s $1,000–1,500 — sometimes narrowing the price gap with used models. Plus, warranties reduce unexpected repair costs.
You also need to consider reliability and peace of mind. If you’re living paycheck to paycheck, a major unexpected repair can destabilize your finances. Buying a slightly more expensive but dependable product may actually reduce long-term stress. Financial stability isn’t only about maximizing returns — it’s about minimizing risk.
The danger is using “used is smarter” as an excuse to buy things you don’t need. Whether new or used, spending $5,000 on something unnecessary is still spending $5,000. Focus first on building a 3–6 month emergency fund, contributing 10–15% to retirement, and avoiding high-interest debt.
In general, for personal consumption and depreciating items, used is often the wiser financial choice — especially if it keeps you from borrowing.
It’s not about impressing people today — it’s about protecting your future self tomorrow.

Is buying used always smarter than buying new?

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