New cars are not an investment

Many Americans might consider buying a new car as an investment. After all, it is an expensive piece of machinery that they will presumably have for many years and it can be sold or traded-in down the road for another new car!

According to Forbes, buying a new car is one of the worst things to do when considered from the perspective of return on your money.

As an example, a brand-new $25,000 car will lose about 10 percent of that value ($2,500) in the first year alone.  The majority of the car’s depreciation, in fact, will occur within the first five years of ownership.  If that car is financed because of the high price tag, add on another $3,100 in finance charges to that lost depreciation, and it is easy to see how much value is lost by purchasing the car new.  By saving up cash and purchasing a used car that is at least five years old, consumers stand to gain a little more financial freedom in the process.