Is it smart to invest in a new car? (2024)

Is it smart to invest in a new car?

Given the high initial cost of purchasing a new car (vs. a used car) and depreciation, purchasing new can still be a good option. If you know you'll be keeping the car for many years, then it pays to purchase new. According to Consumer Reports, many dealers are offering zero percent interest incentives.

Is it a smart idea to buy a new car?

Key Takeaways. New cars come with the latest safety features and are very likely to be reliable, though they can come with a higher price tag and insurance costs. Used cars are generally cheaper because the high depreciation of their early years is already behind them and you may not need as much insurance coverage.

What makes a car an investment?

A car investment isn't the same as buying a vehicle for your own use – it's about buying cars with the intent of reselling them at a later date for more than you originally paid. This type of investment can make you money if you buy the right car and wait until the market is in your favor when you decide to sell.

Is it exciting to buy a new car?

The new car smell is nice, but the best part is exploring it as you drive away from the dealer and learn all about the various features and performance of your new car. They say money can't buy happiness, and that's probably true especially in the long term, but a new car purchase can be a very enjoyable experience.

Is it good to invest in a car?

On a practical level, a car can be a wise investment when it substantially lowers other expenses, Doornebos said. “A fuel-efficient, reliable car can significantly reduce commuting costs, offering financial and lifestyle benefits.”

Is buying a new car worth it in 2024?

"2024 is probably the best year since the pandemic to buy a new car," Mark Schirmer, director of industry insights at Cox Automotive, told ABC News. "2021 and 2022 were really difficult years. Dealers are talking about discounts again ... this was not happening 18 months ago.

Will new car prices drop in 2024?

Prices on new cars are expected to drop in 2024 as the industry moves beyond the supply-chain issues that pushed up auto prices during the pandemic, which will gradually ease the prices on used vehicles as well. That's welcome news for car shoppers who have faced record-high prices over the past couple of years.

Why you should always buy a new car?

Advantages of Buying a New Car

Reliability is one of the perks of buying a new car because you will be the first owner. A brand new car offers peace of mind and a sense of security. There's no need to worry about hidden flaws, plus the car will typically come with a three-year, 36,000 mile warranty.

Is a car an asset or investment?

A car is a depreciating asset that loses value over time but retains some worth. Because you can convert a vehicle to cash, it can be defined as an asset.

How much money should I invest in a car?

#1 Calculate Your Monthly Car Payment

Use your annual income as a starting point to calculate how much car you can afford based on monthly payments. Financial experts recommend spending no more than about 10% to 15% of your monthly take-home pay on an auto loan payment.

Are expensive cars an investment?

Good Value: Some see luxury cars as a worthwhile investment that appreciates over time. Unlike other, less expensive cars, an upmarket car retains its value. It makes good fiscal sense to buy an item that doesn't depreciate, a fact that is certainly one important incentive behind the purchase of a luxury car.

What is the best month to buy a new car?

In terms of the best time of the year, October, November and December are safe bets. Car dealerships have sales quotas, which typically break down into yearly, quarterly and monthly sales goals. All three goals begin to come together late in the year.

How much should I spend on a car if I make $100,000?

Starting with the 1/10th guideline, created and pushed by Financial Samurai, this guideline states: buy a car in cash that costs less than 1/10th your gross annual pay. If you make $50,000 you should buy a car in cash worth $5000. If you make $100,000, the car you buy should be worth no more than $10,000.

What are the pros and cons of owning a new car?

Do millionaires buy or lease cars?

Overall, only 8.5% of these high rollers paid cash. Around 31% leased and 60.4% took out a loan with an average payment of $2,201 and an average term of 56 months. For comparison, the general market in 2021 saw 9% of buyers paying cash, 20% leasing, and 70% taking out a loan.

Is it better to invest in car or house?

“Vehicles usually depreciate the minute they are purchased and driven off the lot. If a consumer is deciding between buying a car or a home first, a home will be a better investment for them in the long run.” However, it's important to not rush the process and only buy a home if you are financially ready.

Should you pay off car or invest?

Key takeaways

If the interest rate on your debt is 6% or greater, you should generally pay down debt before investing additional dollars toward retirement. This guideline assumes that you've already put away some emergency savings, you've fully captured any employer match, and you've paid off any credit card debt.

How many years does the average person keep a new car?

With the average length of car ownership at about 8 years, car owners should be mindful of ways to improve their car's longevity. Using the above tips, you can extend your car's lifespan and enjoy it for more miles on the road.

How many years should you keep a new car?

A car lacking equity has no value or even negative value in a replacement car transaction. The average length for keeping a new car is 8.4 years. When valuing a used car, 12,000 annual miles is considered average.

Are cars too expensive in 2024?

After a year of supply shortages and climbing borrowing costs, 2024 is shaping up to be a better time to buy a car. The average transaction price for a new car in the U.S. in February was $47,244, down 2.2% from February 2023. That's also down 5.4% from the market peak in December 2022, according to Kelley Blue Book.

What not to say to a car salesman?

Why are cars so expensive in 2024?

Much more like it has been historically.” The price spikes that followed the 2020 pandemic were caused mainly by a worldwide shortage of computer chips, which are vital to auto manufacturing and had forced plants to curb production. As vehicle availability shrank, prices soared.

Is there still a car shortage in 2024?

The automotive supply chain will likely never look like it did pre-pandemic, but inventory levels generally recovered in 2023 and are expected to continue doing so in 2024 and 2025. Car prices remain elevated in 2024 due to inflation but are showing initial signs of decreasing as inventory stabilizes.

Can you negotiate a new car price?

The short answer is yes. However, for many, even the thought of negotiating new car prices can seem intimidating. Treat this experience like any negotiation and go in with a plan. The more thought you put into it upfront, the more confidence you'll feel about speaking with your dealer about the price of your new car.

Why are used cars better than new?

Advantages of Buying Used

Used car buyers are spared the expensive depreciation that new car buyers experience over the first couple of years of ownership, and buying a used car can bring otherwise unattainable levels of luxury, comfort, and even safety features within reach.