New vs used cars: What should a doctor buy?

By Physician Sense, for MDLinx
Published August 26, 2019

Key Takeaways

New cars vs. used cars. Read enough personal finance blogs and you’ll find that the truly frugal advocate for always buying used. But the truth is, the correct answer is a lot more nuanced than that, especially if you’re a high-net-worth individual, such as a physician.

Before we go any further, take a moment to revisit this car-buying guide for physicians. We at PhysicianSense advocate for following the 5% rule of car buying, which says that you should purchase a car that costs no more than 5% of your net worth. The principle that underscores this habit is as follows: Vehicles are one of the few depreciating assets that Americans are willing to finance. 

Let’s explore that for a moment. Think about some of the other things you’ve gone into debt over at this point in your life: your house, your education, maybe your health. The house will likely gain value over time. Your education will produce wealth over your lifetime. Being healthy will enable you to be productive and consequently make money. But your car? Your car is guaranteed to deteriorate and become worthless. So, why are you paying interest on it again? We advocate for purchasing outright, not financing cars.

With the 5% rule in mind, let’s explore, compare and contrast buying new vs. buying used.

Buying new cars

If under the 5% rule you can afford a new car, it might be worth it for you to purchase one. Here are a few of the reasons why.


Let’s be real: Nobody brags about their used car. Everybody says, “new car.” If having the status that comes along with the new car smell is worth it to you, and you can afford to buy one outright using the 5% rule, then go for it. Just remember, as soon as you drive the car off the lot, it’s worth about 20% less than you paid for it.


This is one of the biggest reasons to go new. New cars tend to be more reliable than their used counterparts. Fewer miles and no previous owner mean that they’re more likely to perform as intended. Additionally, most new cars come with substantial warranties that will cover you in the event of a mechanical failure. Maybe this peace of mind is worth it for you.

Ease of purchase

Generally, it’s easier to buy a new car. You don’t have to deal with title transfers, for one. You won’t have to worry about getting an independent inspection from a mechanic, or pay for a Carfax report, either. Also, you have more options when purchasing a new car. If the dealer doesn’t have the color and trim level you want, they can order it for you.

Gadgets and technology

New cars have the latest safety and comfort technology. Perhaps you’re an emergency physician who’s seen enough motor vehicle accident patients to last a lifetime. Especially if you have children, having the safest vehicle possible might be a priority for you. Additionally, new cars have improved mobile technology integration. This might be important to you if you’re in your car a lot.

Should you buy a new car?

To the editorial team at PhysicianSense, this boils down to dollars and sense. If you apply the 5% rule and can buy a new car outright (i.e., without financing), then it might be worth it for you to do so. Here’s why.

Continue reading on Physician Sense >

Share with emailShare to FacebookShare to LinkedInShare to Twitter