The Car as an Investment – What Do You Need to Know?

Most people buy the car of their dreams after years of hard work. But even though a car is an expensive purchase, it doesn’t mean that it will turn out to be an investment. A car is the biggest purchase you make in your life apart from a house. So, most people assume that a car is an investment considering the hefty price tag attached to it.

The literal meaning of the word ‘investment’ is the process of buying something which will make you money after some time. For example, a house’s value appreciates over time. Stocks pay a dividend and also appreciate. These are wise things to invest in because they help increase your wealth and make money for you over the period.

Is Buying a Car an Investment?

If we speak figuratively, a car is an asset and not an investment. Financial gurus consider buying a car as an asset because you can sell your car in emergencies and get a large amount of money in exchange.

Cars start losing value the minute you drive them off the parking lot. What’s more? They also require constant maintenance and additional costs like gas, oil, insurance, and repairs to perform up to the mark. All cars are prone to wear and tear, and their value depreciates with each passing year.

Realizing these facts are important as they can help you choose between a new and a used car.

Here are six things to keep in mind before buying your next car to make sure that it is the best investment available.

Buy a Used Car

A car usually faces the biggest depreciation hits in the first three years of ownership. This is why buying a used car means you won’t lose as much money as compared to buying a brand new one.  A reliable car with a bunch of miles on it is the best bet. However, many car dealers might tempt you to buy a new car as it offers reduced maintenance, warranty coverage, and peace of mind. If you are having thoughts like “should I sell my car in exchange for a gently used one” then visit a trusted car dealer instead of going to a random one.

The key is to do a lot of research before you decide on a particular car brand and model. Which brings us to our next point.

Do Plenty of Research

Make sure you do adequate research before heading out to go to the car dealership. If you walk into the dealers without some hard data, you’ll end up making a poor vehicle selection and losing a lot of money.

Research online and seek a lot of information regarding different vehicle brands and models. Also, evaluate your usage and calculate how many hours will you use the car. This way you will know exactly which car to choose when you head out to meet the vehicle dealers.

Pick a Reliable Model

Reliability should be the most important factor when it comes to buying a car. A reliable brand and model will ensure that your repair and maintenance costs are minimized. You can use it for many years to come and keep it out of the repair shop. Both these factors will put back money in your pocket and turn it into an investment.

Buy a Classic Car

The market for classic cars has cooled down significantly over the past few years. But there is no doubt that buying luxury goods, such as a classic car, is one of the wisest investments you can make.

According to research by Knight Frank Luxury Investment Index, the wine offered three percent annual returns and watches offered four percent annual returns. It was also observed that classic cars offered a whopping 28 percent to the investors! Now that’s what we call a wise investment.

Don’t Overspend on the Extras

If you are a car enthusiast, you’ll find yourself spending a lot of extra bucks on nifty car gadgets. However, it is crucial to identify the ones you need. Do you need an inbuilt car DVD player? Is buying a four-wheel drive a necessity?

Focus on the core features of the vehicle only and avoid overspending on the extra fluff. Remember, all you need is a reliable and fuel efficient vehicle for the best investment.

Learn Some Basic Car Maintenance Hacks

Some car maintenance chores can easily be done in your garage. These include oil change, airing up your car tires, changing the air filter and transmission fluid, etc. These will save you at least $20 to $30 per week. Learn some tricks from a mechanic or follow the instructions in the user manual.

Once you learn how to do these basic car maintenance tasks yourself, you will save a lot of money for the rest of your life.


As we discussed above, buying a car is can be a poor or a wise investment based on how well you take care of your car. The fact that the value of a car depreciates from the minute you get it out on the road doesn’t mean people have stopped buying cars. Adults buy a car several times throughout their lifetimes. But, by following the tactics mentioned above, you can ensure that your next car purchase turns out to be a good investment for the years to come.

So, implement these small changes, and you will notice that your car expenses will reduce significantly over the longer run You’ll find yourself saving some extra cash which will make your car a wise investment instead of being a financial burden.

Do you have any more tips and tricks that can make your car an investment? If yes, share some with us in the comments below:

P.S. Many thanks to one of my readers for providing this material.

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