Do you see a car as an investment? It’s no surprise if you do. There’s a lot of money involved – perhaps the second biggest payment you will make, after your mortgage, and you will do so every five to ten years. But, the simple fact is that in the vast majority of cases, buying a car is an expense, not an investment.
However, it doesn’t always have to be like this. There are ways to ensure that your car is an investment, rather than a financial burden. And, today, we’re going to take a look at some of the things that anyone can do the next time they buy a car. Try them out and see how you get on – maybe next time you’ll get more than your money back?
Image Credit: Damian Morys
Don’t buy new
First of all, never buy a brand new car. Over time, cars lose value through depreciation, and the vast majority of that takes place in the first few years of a car’s life. In fact, you can lose as much as 20% of the value as soon as you drive it off the forecourt. Within three years, that depreciation could be anything up to 50% of the original value – an astonishing amount of money.
Never use finance
Because of depreciation, taking out a finance deal for a new car is bordering on the silly. Let’s assume that you have a five-year loan on a brand new car. After three years, the car has lost half of its original value, while you are still paying something like another 50% on top of the price in interest. In effect, you will lose all your money before you even finish your loan term. It makes no sense, and the only winners with financing are the manufacturer and the loan company.
Learn about future classics
Some cars will hold their value, and some might increase it – and there are plenty of people out there who have learnt how to turn a profit. Now, this is a big subject, perhaps deserving of its own post, but there is plenty of sound advice out there on the web. So, if you want to learn about future classics, have a look around for some excellent guides on how to spot them. In brief, though, there are a few things to think about. Look for newer models of cars that have enjoyed long-term success, such as the Range Rover. Classic models can be pricey, to say the least. But, if you can catch the newer versions as they hit their depreciation high, the value may well increase. Also, you have to maintain your car well, which we will take a look at now.
Keep your car in excellent condition
Finally, no car will be an investment if you don’t look after it, so make sure that you keep it in great shape. You will need to put it in for regular servicing, keep it clean and tidy, and watch those miles clocking up. Storing it in a garage can also help as it keeps your car out of the sun, which can have a degrading effect on your paintwork. You should also make sure that you drive it efficiently. All cars have different efficiency levels. So, make sure you find out your optimum speeds, and avoid thrashing your new vehicle around the place.
Any more tips on making the most of your money when buying a new car? Why not let us know in the comments section below?