Share your insights or perspective on the financial matter presented in the input.

Why do people buy new cars they can not afford? 
Two reasons: Many people make lots of financial decisions (and other kinds of decisions) without actually running any numbers to see what is best (or even possible).  They just go with their gut and buy things they feel like buying, without making a thoroughgoing attempt to assess the impact on their finances.  I share your bafflement at this, but it is true. A sobering example that has stuck with me can be found in this Los Angeles Times story from a few years ago, which describes a family spending $1000 more than their income every month, while defaulting on their mortgage and dipping into their 7-year-old daughter's savings account to cover the bills --- but still spending $275 a month on "beauty products and services" and $200 a month on pet expenses. Even to the extent that people do take finances into account, finances are not the only thing they take into account.  For many people, driving a car that is new, looks nice and fresh, has the latest features, etc., is something they are willing to pay money for.  Your question "why don't people view a car solely as a means of transportation" is not a financial question but a psychological one.  The answer to "why do people buy new cars" is "because people do not view cars solely as a means of transportation". I recently bought a used car, and while looking around at different ones I visited a car lot.  When the dealer heard which car I was interested in, he said, "So, I guess you're looking for a transportation car."  I thought to myself, "Duh.  Is there any other kind?"  But the fact that someone can say something like that indicates that there are many people who are looking for something other than a "transportation car".