Car as an investment – what to consider

In recent years, cars have become increasingly popular as a form of investment. Many people use this investment to gain long-term financial security and protect their savings. Although it can be a risky venture, cars as an investment can yield good returns and, depending on the model, sometimes huge profits. But it is similar to gambling. Users of gambling games such as 777, dream of making money. But whether it will succeed is impossible to predict.

In this article, we take a closer look at the pros and cons of cars as an investment. As well as ways to minimize risk so savers can get the most out of their investment.

The reality in most cases – the loss of value

In most cases, the value of a new car drops as soon as it has been driven a few miles. A car’s depreciation depends on many different factors. Such as the original purchase price, the make, model and equipment of the car, the age of the vehicle and how it has been maintained. Most depreciation usually occurs in the first few years after purchase, and the rate increases with age.

This is because most new car owners want to minimize the wear and tear on their car and make sure it stays in good condition. In most cases, the value of a car falls disproportionately from its original price as it ages. Therefore, in many cases, a car is certainly not suitable as an investment. As a rule, a new car loses about 20% of its market value in the first year, and each subsequent year this loss can increase by up to 10%.

After five years, most cars lose more than 50 percent of their original price. However, as described, this depends on several factors. In particular, the equipment is an important pillar and, of course, the overall condition. Yet cars are losing more and more of their value. With one laudable exception: classic cars and rare cars from special car brands, which have reached significant value today.

Classic cars as an investment with high returns

Classic cars as an investment are considered a particularly lucrative investment because they tend to increase in value. They are a favorable investment and can be very profitable. With the changing market of classic car collectors and enthusiasts of old rare cars, demand for this type of investment is increasing, leading to rising prices. Even with fluctuating stock markets, classic cars remain relatively stable.

Some advantages of buying classic cars include independence from inflation, profit potential, increase in market value and the ability to reach a wide group of potential buyers because of its stable value. However, it is important to be well informed and find the right classic car to be successful in the investment. Thereby, an appraisal by a specific expert is indispensable for the purchase.

An appraisal of a classic car is an expert valuation of the vehicle based on its features and condition. Normally, such an appraisal takes into account make, model, body shape, engine power, transmission, equipment options and original paint job. In addition, mileage, interior equipment and other items can also be included.

Valid price lists of similar models are used for this assessment, as well as references of comparison vehicles. This should give a realistic picture of the vehicle’s market value and help the owner negotiate the right purchase price or sell the car. However, not every classic car provides a return on investment. Therefore, the business is always associated with risk.

Sports cars as an investment

Sports cars are a special and expensive type of investment. They usually have a very high risk (because of the sometimes huge investment), but can also provide a corresponding return. Especially for particularly rare and valuable models, it is possible for prices to rise, which can lead to a positive return on investment. However, sports cars are also subject to strong fluctuations in resale value and therefore should only be viewed with caution.

Although they usually do not offer the best financial returns, they can have some advantages. For example, an investment in a sports car can be considered part of a portfolio. This also applies to classic cars, by the way. Otherwise, buyers are likely to get a good return on their investment, as many sporty cars are appreciating in value or at least holding their price these days.

Especially if they are of well-known brands and models. They are generally not as volatile as other asset classes, and prices have usually experienced only small fluctuations. Moreover, buyers can rent out sports cars, making it even more lucrative for investors. Of course, always with the background of fully comprehensive insurance in case of emergency.

Examples of TOP returns for cars

The 1967 Ford Mustang Shelby GT500 is a classic muscle car that has proven to be a very worthwhile investment. With its legendary V8 engine and impressive looks, this classic offers security and stable performance. Also one of the most sought-after classics is the 1970 Plymouth Barracuda, which charms with its powerful engine and aggressive design. Thanks to its (usually) higher residual value and increasing demand for original parts, it offers impressive returns.

But the 1969 Chevrolet Camaro SS is also one of the most popular sports car models in the US and remains a favorite among classic car enthusiasts to this day. With its robust motors, stylish design and high investment return, it will make any investor happy. As for European models, the Mercedes-Benz Coupe 300 SL charms with impressive efficiency. First built in 1957, the classic is currently trading for more than a million euros. It is a fact that rare and popular classic cars can sometimes reach enormous values and thus returns.

Even the infamous Porsche 911 loses no value as a classic, so to speak. On the contrary. In the past 15 years alone, the car achieved a value increase of as much as 600 percent. Often American muscle cars and German brands are the most likely to yield returns. However, there is always a residual risk that the investment will not yield the desired amounts when resold. On the other hand, cars score as a financial investment with the fact that inflation hardly affects them and classic cars and old sports cars are at least a relatively safe financial investment like gold.