The quick answer to the question “is a used car a good investment?” is that it can be, but you need to do your due diligence and choose carefully. You also need to treat a used car like an investment, which means you need to take care of it and ensure it delivers on everything you want from it. In other words, before you head to any used car dealerships, put some time into doing a little research and consider all of your options. You wouldn’t invest a few thousand dollars into a business without learning all you can about it, and you should treat a used car much the same way.
This means you need to know the market in general, and you need to look into any specific model you are interested in before making a decision. I’m going to assume you don’t have the time to learn about every used model out there and find out how they stand up to long-term use. But you can do some general research and have a critical eye to maximize your chances of getting a good vehicle that will serve as a solid investment.
Let’s take a look at what you should consider.
Overall Vehicle Longevity
First things first: if you’re looking at a used car as a possible investment, then you need to be mindful of just what sort of longevity you can expect from a vehicle. A good car should be a relatively long-term investment and a sensible one. Twenty or more years ago, you were pretty happy to get about eight years out of a car, maybe about 100,000 miles from it. Modern vehicles, however, have been improved and are designed to last much longer.
These days, a vehicle typically lasts nearly 12 years, and you should be able to get about 200,000 miles out of it if you treat it well. This is based on information from numerous sources, including Consumer Reports, and it shows in the kinds of warranties you can find on a brand new vehicle. A new model used to come with a three-year or 36,000-mile warranty; now, however, a new model will often come with a 10-year/100,000-mile warranty. It’s not just researchers and market analysts saying cars are lasting longer, the manufacturers are standing behind them longer too.
Used Vehicle Longevity
That’s all well and good for new models, but we’re talking about the vehicles you’ll find at used car dealerships. What this really comes down to is that even in the used market, you can still take advantage of the longer lifetime that vehicles tend to have these days. Use this information when shopping for vehicles at used car dealerships and when comparing different options you find.
For one thing, it means that if you find a model that’s only three or four years old, then it will probably last you longer than one that’s already ten or more years old. Of course, mileage also comes into play – you want to find a model that has the lowest possible mileage on it. It’s not just about time but also how much a vehicle has been used. A three-year-old car with 100,000 miles on it has likely been through a lot more than an eight-year-old car with 40,000 miles on it.
That brings us to my next point…
Look at Things Critically
If you want to get a good investment with a used car, then you need to approach it carefully and have a very critical eye while shopping. One of the biggest mistakes people can make when shopping used cars are feeling self-conscious about actually inspecting the vehicle and looking it over carefully. Don’t worry about hurting the seller’s feelings – especially when shopping at used car dealerships. You’re the buyer, which means you have the right to be critical and cautious before handing over your money.
You know the phrase, “Buyer beware?” That’s often used in a cautionary sense, to remind people that sellers can take advantage of them. But you should see it as a reminder that the ultimate responsibility for a purchase rests on your shoulders. You have the power to either choose to buy something or not.
So take a good long look at any vehicle you’re interested in. Make a checklist ahead of time of the things you want to check and look at and use this while shopping at used car dealerships or dealing with a private seller. It’s a lot easier to think of these things ahead of time rather than when you’re at a dealership and feel on the spot.
Check a vehicle inside and out and look at all the details. Look at the tires and the tread on them. Start the car from cold if you can and listen to how it sounds. Check every system of the vehicle – that means turn on every light, check the blinkers and hazard lights. Look at the interior carefully and look for damage or signs of excessive wear and tear. Trust your nose: if you smell mildew or cigarettes, then get out of there.
Treat Your Vehicle Like an Investment
Once you buy a vehicle from a used car dealership or a private seller, you should then treat it like an ongoing investment. While you can’t control whatever happened to your car before you bought it, you have total control over how you take care of it once it’s yours. Experts pretty much universally agree that the best way to turn your used car into a sound investment is to give it proper maintenance and care.
That means figuring out the service schedule in your vehicle’s owner’s manual and sticking to it. The people that made your car know how often it should be serviced, so follow that schedule and make it a priority. If you hear or feel something that seems off, even if it’s pretty minor, have a mechanic you trust take a look at it. Something small can be quick and relatively cheap to fix – but if left unchecked, it can create a much more severe and far more expensive problem.
If you buy a used car that is five years old, with 70,000 miles on it and it’s in good condition when you get it, then you should expect to get at least another five years, probably more, and another 100,000 miles from it. That’s a good investment.
Investment vs. Clunker
One standard piece of advice that often floats around the old internets is that if you are on a tight budget, then it’s worth it to buy a car for a few hundred bucks and drive it to get to and from work every day, even if it only lasts you six months. While it’s true that you certainly need to be able to get to work to pay your bills, think very carefully about if this is the best option for you. Can you afford to throw away the price of the car and have to pay it again or pay more in a few months or a year?
If so, then a beat-up clunker could be the right choice for right now. But whenever you can, choose a vehicle that is more of an investment in your future and drive it for as long as possible to get the most out of it. A used car can be a good investment if you pick the right one.