The truth about investing in a car, is that it really can be a horrible investment. Cars depreciate in value and never yield a return other than being a reliable mode of transportation to and from work – sometimes. Not only can dealers inflate prices to make you think you are getting a great deal, the moment you drive it off the car lot it automatically loses about 10% of it’s value or more. Cars can come with costly repairs and maintenance, and you have to insure this investment as well. When you’re looking to finance a new car, here are some things you should consider before you buy.
The Warranty Will Run Out
Not only will your warranty run out, it will likely expire before your loan is paid off. Most costly repairs come after you car has hit the 50,000 mile marker. Which means all of that investing in extra warranties, that the dealership has conned you into, is a horrible investment all by itself. There is no ‘free maintenance’ because the really big maintenance you need won’t come until after your warranty has run its course. This fact alone should deter you from financing a new car, even though there are many more.
You Are Not The Owner Of The Car
Quite possibly the most awful thing about financing a new car: you do not own it until the last payment on your loan is paid. During the length of the loan, you are the lienholder. That means the bank or financial institution through which you took out your loan on said car – they own your car for the duration of the loan. In the event that anything in life gets you down and you miss a payment or two, the loan holder can take your investment from you. The number one thing to do when you are looking for a car is to do loads of research. www.cars.com is one of the most comprehensive websites for car shopping. You should look up the features and reviews of the cars you might possibly invest in. That way you know just where your hard earned cash is going.
Cars Rapidly Depreciate In Value
Buying a new car is a horrible investment. Not only can you end up upside down due to the combination of the sticker price and your loan interest, your car isn’t worth as much the moment you drive away in it. Cars depreciate in value so rapidly, especially in the first two years. In a recent article in Forbes, discussing what a horrible investment a new car is, they stated that along with the loan payments for financing your new vehicle, the car has to be “insured, repaired and maintained and registered with the state, further driving the cost of it higher…over five years it will cost an estimated $33,604 to drive your $25,000 vehicle, making the loss on this investment even higher.” Which makes a used car more valuable in the grand scheme of buying a car and making an investment in a vehicle.
