How to Invest in a Car

Most people who have purchased a new car already understand that it is generally an extremely poor investment, which loses perhaps half of its value the instant it is driven off the car dealer’s lot. The remaining value then tends to fall by 20% each year, until it flattens out at its fully depreciated value after the car is ten to fifteen years old. Most experts would agree that buying a new car is emphatically not how to invest in a car successfully.

Nevertheless, some more creative investors might want to learn how to invest in a car, especially a classic car that they might enjoy owning for pleasure driving purposes and that would appreciate in value over time.

Although opinions certainly differ today as to what will be a classic car in the future, as a general rule, classic cars tend to be older cars that have extra appeal to collectors due to such things as their rarity, popularity or initial value when new.

In order to start the process of investing in a classic car, you can try looking around for a garaged car in good running condition with low mileage that is already more than fifteen years old so that the majority of its exponential depreciation has already taken place.

In addition to looking for formerly very expensive cars like the Rolls Royces, Ferraris and Porsches that often become instant classics, it helps to know that two door coupe models tend to be more desirable than four door models, especially for sportier cars.

Another tip for the economically minded would be car investor is that highly reliable, inexpensive and gas efficient cars such as Hondas often tend to be more desirable, and hence more likely to retain their value, than less reliable, gas guzzling, family cars like some Ford sedans, for example.  Older Hondas also became notably popular after the 2001 film The Fast and the Furious starring Vin Diesel showed them being repainted, sped up and customized as street racing cars.

Furthermore, those with mechanical skills applicable to fixing autos could be interested in how to invest in a car that is not presently running due to some mechanical defect, but which they could probably repair themselves or with the help of a friend.  Another repair strategy involves buying two similar dysfunctional cars that have different problems and can be merged into one working car under a salvage title.
By InvestorGuide Staff

Copyrighted 2020. Content published with author's permission.

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