If you were to ask an investor what type of investments they have in their portfolio, they’d probably mention their securities on the stock market, their CD account, and maybe a piece of real estate property that they own. But they probably wouldn’t think of their car as an investment—and that’s where they’re wrong.
In fact, the definition of an investment is: “the action or process of investing money for profit or material result.” According to this definition, your vehicle would count! Depending on how you make your investment decisions when buying a car, it could be a really positive alternative investment or it could be an unfavorable one.
If you’re determined to maximize your vehicle investment—as you should be—take a look at our tips to learn how!
Think about buying used
If you’re set on buying a brand new car, you might want to consider your other options—that is, if you want to get the most value out of your vehicle investment. New car depreciation is something that should be at the forefront of your mind when shopping for a vehicle. Like other investment assets, cars also depreciate in value over time, which could mean you end up eating the cost when you decide to sell. According to data on new car sales, the average new car depreciates approximately 20-30%. Again, that’s 20-30% of the cost of the vehicle that you’re immediately sacrificing upon the moment you decide to drive off of the lot.
Buying a used car doesn’t mean you have to compromise on quality. In fact, used dealerships often sell newly released models that have been gently used. Sometimes, they even sell their floor models which are generally in tip top shape. And if you buy from a certified dealership, you can ensure that your vehicle has been taken care of to the manufacturer’s specific standards. All in all, buying a used car is worth thinking about in order to make the most of your investment.
Do your research on makes and models
Another thing to consider when shopping for a car (that’s new to you), is of course, the make and model of the vehicle. Buying one that has a consistent market value, is reliable, and is not overly trendy is generally the way to go if you plan to sell your vehicle. A good rule of thumb is to consider the average person shopping for a new car—would they want a luxury vehicle painted chrome or would they choose a standard sedan in a neutral color? The general market would likely choose the latter.
Whether you’re shopping for a new outfit or a new car, you’ll certainly want to get the best deal you possibly can! Our advice here is to not accept the first offer you receive, because you never know what kind of deal another seller is willing to give you until you ask. Depending on the location of the dealership, their inventory, and even the weather, one dealership might be able to give you a better deal than another. An Audi dealer in Spokane for example, may be able to offer you a lower price than the dealership in Seattle, simply because the cost of living is lower there and they may have more available inventory.
If you do your due diligence and shop for comparisons, you’ll almost certainly be rewarded for the extra effort.
Follow maintenance best practices
The key to getting a good deal on the sale of your vehicle? Good maintenance. No one wants to drive, let alone buy a car that’s in bad shape. Therefore, it’s important to perform required maintenance on your vehicle whether or not you plan to sell. Enlist the help of a certified auto mechanic that specializes in the make and model of your vehicle so you can trust that they’ll be able to follow best practices as they work on your car. You wouldn’t want old Ford parts in a Jaguar, would you?
In addition to performing engine and part maintenance, you’ll also want to be sure to keep your vehicle clean and cosmetically clean. Routine car washes and detailing is recommended!
To increase the integrity of your auto investment, follow these tips and you’ll be rewarded!