Updated on 09.15.14

How To Buy a Car As a Good Investment For The Future

Trent Hamm

Automobiles are some of the worst investments you’ll make in your life. They immediately start losing value the second you drive them off the lot. They require constant additional cost to stay on the road (in the form of gas, oil, insurance, and repairs). They’re prone to breaking regularly. They’re a potential physical danger. Best of all, when you finally decide to sell it, you get only a pittance of what you paid for it in return.

A very poor investment, indeed, but it’s one almost everyone makes several times throughout their adult years. I’m on the verge of buying my third automobile and this time around, I’m going to do what I can to ensure that it’s a good investment for the long haul. I’m also taking care to consider what my car insurance options are for the vehicle I end up buying.

Here are eleven steps we can all take to ensure that our next car purchase is the best investment available.

Buy a late model used.
I’ve seen countless different models that show different potential car buying possibilities and clever arguments on behalf of each of them. Lease a car. Buy new, but negotiate and hit a good sale. Buy the most reliable car with a bunch of miles already on it.

In the end, though, most unbiased analyses seem to point towards late model used cars as the way to get the most car bang for the buck. From an excellent unbiased comparison of used versus new from Cars.com: “If you’re on a tight budget, then buying a used car gets you the most vehicle for the least amount of money.” Since that’s what I’m looking for – the most vehicle for the least amount of money – then it’s late model used for me.

That article does give a lot of reasons for buying new: reduced maintenance, warranty coverage, roadside assistance, and peace of mind. However, these factors are mostly important only if you don’t do adequate research beforehand, and that leads us into some of the other points…

Do your research before you ever approach a car dealership.
The best way to get a poor deal on a car is to not adequately research things before you go to the dealership. If you’re walking out to the dealership without having evaluated some hard data and figured out based on that hard data what you’re looking for, you’re going to wind up with a poor selection.

Before you even head to the dealership to make your purchase, do some research. Hit the library and dig through their car buying guides for the last few years, seeking as much information as you can about different models in the type of car you’re considering. Spend a few hours on it – it’s time that will pay off over the long haul if you know exactly what to get when you head out to the dealership.

Most importantly, you don’t have to know much about cars to do this research. Most of the research tools you’ll use are extremely self-explanatory. For example, Consumer Reports breaks everything down in easy-to-compare numerical scores so that you can quickly tell which is the better option in the areas you’re looking at – and by how much.

What should you be looking for to maximize your investment?

Buy a model that’s known for reliability.
The first big factor to look for is reliability. The first place I look is the reliability reports in Consumer Reports for the last three years. I focus in on brands that have a high reliability factor – Hondas and Toyotas tend to do well in these, while Volkswagens do poorly.

Not only do I look at reports for individual models and years, I also focus on more general reports about reliability from that company. For example, if I were looking at a Ford Taurus from a particular year, I’d also look at all sedans produced by Ford, since they often have most of their parts in common. This will give a broader view as to the reliability of the model you’re studying. It’s in your best interest to take a look at how aftermarket parts affect your car insurance.

Why is reliability so important? A reliable car will minimize your repair costs over the long haul and also give your car a longer drivable lifespan – you’ll keep it on the road for longer overall and, even better, keep it out of the repair shop. Both will put cash back in your pocket.

Buy a model that’s known for fuel efficiency.
While looking at reliability, I also keep a big eye out for fuel efficiency, the other big area I look at when evaluating a car. For this number, I use fueleconomy.gov to get standardized numbers across all model years. I don’t pay much attention to small differences (up to 2 miles per gallon), but differences larger than that start to add up to significant differences in the amount of fuel your car will drink per year, and if the difference is significant (five miles per gallon or more), you quickly start talking about hundreds of dollars per year (assuming normal driving levels).

Why is gas mileage so important? It’s every easy to demonstrate the power of gas mileage. If one model gets 18 miles per gallon and another car gets 28 miles per gallon, over a normal year of driving (10,000 miles), that’s 198.4 gallons of gas. At $4 per gallon, that’s $792 saved – and that’s a big difference.

Be sensible about the extras your car actually needs.
Most of the nifty gadgets in a car are really not all that necessary? An in-car DVD player? Just get an inexpensive portable one. OnStar? Just use your cell phone and call for necessary services. All wheel drive? If you don’t live on a farm or in an area with severe winters, it’s not necessary.

Focus in on the core features you need and don’t worry about the other fluff. You need a reliable car to get you where you’re going and good fuel efficiency to save you money. The rest? Not really important. Remember, this is about getting the best investment out of your car that you can, and these extra features are simply inessential. Focus on the essentials.

Do due diligence before you buy.
Take the car for a test drive, then take it to a trusted mechanic who will look for problems for you. Also, mark the car’s VIN and do a CarFAX history report so you can know if there are any major hidden problems you might want to know about. Taking these two steps can go a long way to keeping you away from a lemon and helping you to ensure that the car you’re buying is a solid purchase.

This won’t protect you from everything, of course, but it will identify major issues that may be hidden from you at first glance.

Keep it clean.
Once you actually own the car, keep it clean consistently. A dirty car, both inside and out, is a sure way to increase the wear and tear your car will face. Clean out your car regularly, particularly in the spring after the winter weather has passed – the salts and cinders that are used to keep the roads passable are very hard on your car. A spring cleaning can go a very long way toward mitigating that problem.

Follow the maintenance schedule as described in the manual.
Don’t pay any attention to the schedules offered to you by repair shops or your car dealership. Look at your car’s manual and follow that maintenance schedule as closely as you possibly can. Repair shops and car dealerships pad their maintenance schedules with more frequent stops than necessary – these will go above and beyond what’s needed to keep your car running. Instead, trust the manufacturer and save yourself a pretty penny.

One of the biggest things you’ll notice is that your manual points you towards less frequent oil changes. Most repair shops push for oil changes every 3,000 miles, but with modern engines and modern automotive engineering, they’re simply not needed. Many manuals suggest an oil change every 5,000 miles – others recommend changes every 7,500 miles. Check your manual, follow the instructions of the actual manufacturer, and save yourself some cash.

Keep an accurate record of the maintenance you perform.
While performing this maintenance, keep a detailed record of the maintenance. Record every maintenance in a log book – the type of maintenance, where it happened, the mileage on your car when it happened, and the date. When you go to trade in or sell your car, this can provide great documentation about the maintenance your car has received.

I keep my log book in the glove compartment and just take a few seconds after each maintenance task to add a note. This way, when I go to sell the car, I can provide that log to demonstrate that I’ve done proper maintenance. Depending on how you choose to sell the car, this can add some resale value.

Learn how to perform the basic maintenance yourself.
Most maintenance tasks can easily be done in your garage. Just follow the instructions in your manual and try changing your own oil. You can usually save $20 or $30 doing an oil change yourself – it doesn’t take many oil changes for that to add up to some real cash. You can do all sorts of maintenance work yourself: airing up your car tires, changing transmission fluid, changing your air filter, changing your oil filter, and so on.

Learn how to do these yourself and you’ll have the confidence to do such work on any car you own. You’ll save money for the rest of your life with this knowledge.

Drive the speed limit.
Driving the speed limit not only cuts down on the cost of speeding tickets, but it also reduces the wear and tear on your car. A minute more on a trip here or there can keep speeding tickets out of your hair and also extend the life of your car, so it’s well worth it to eliminate the speeding habit. I’ve found that setting the cruise control while outside of towns is a great way to keep my lead foot under control.

Start saving for your next car now, not later.
The final tip is one of the best. Start saving now for your next car instead of taking out a big loan. Let’s say you’re going to buy your next car in five years and plan on plunking down $8,000 on it. Just put $28 a week into an ING Direct savings account earning 3% a year and you’ll have that $8,000 in hand after five years. On the other hand, take out a five year car loan for that car at 9% and you’ll be spending $166.04 a month on that loan – $38.30 a week. Starting saving right now saves you $10 a week on an $8,000 car. If you’re buying a more expensive car, it’s even more savings – each week, every week.

Following all of these tactics will go a long way towards reducing the pain of your automobile “investment,” making a very painful loss much less painful. All of these tactics taken together can reduce your expenses significantly over the long run, putting you in a car that runs better, runs longer, and has smaller monthly payments.

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  1. Unspending says:

    Oh what timing. I just wrote a blog entry about how my stupidest purchase was my car. Based on my experience, I would also suggest people examine if they really, really need a car. I didn’t and I regret buying one.

  2. Joe says:


    Just one note about the cars.com site; you say they are unbiased but please not all 3rd party auto sites, except for Consumer Reports, accepts advertising and has huge web marketing deals with car companies. The car companies buy media on the sites (cars.com, edmunds.com, kbb.com, etc.) and they pay for clicks back to the car company sites. The only unbiased, independent, car ratings, reviews, and pricing site is Consumer Reports.

  3. Sara says:

    Here’s one more argument for keeping it clean: trade-in value. When my parents went to trade in their last car after 10 or 12 years of use, they told the dealer they expected about $3,000 for it. He pretty much laughed in their faces, telling them they’d be lucky to get $1,000 for a car that old. Well, they brought the car around and the dealer had to apologize, as the car was in immaculate condition. Let’s just say they got what they’d been expecting. A few grand is worth the effort of an occasional detailing.

  4. Frugal Dad says:

    I’m fortunate to have received my grandfather’s old 1991 truck, which he took excellent care of and is in pretty good shape, mechanically. The exterior has taken a beating, but it’s nothing a little Rustoleum auto paint couldn’t fix!

    I recognize that a 17 year-old truck doesn’t have much life left in it, so I’m beginning a plan similar to the one you describe to save up cash for a replacement vehicle down the line.

  5. Pat says:

    My philosophy is to lose as little money as possible in a car. I drive 70 mi. each way daily for work, so I want a beater that I can put miles on. For the last few years, I’ve kept an eye on the local craigslist for used pre-2000 Saturns. I’ll buy one with 80 or 90k miles on it that gets 35MPG for less than 2 grand, and drive it for another 40 or 50k miles. Then I’ll sell it for roughly what I bought it. Almost like “free” transportation to me!

    What about the small repairs and the potential time without a vehicle? Easy! I just keep 2 of them. That way if one is in the shop, I have another that I can still use. Trust me, it’s a lot cheaper paying insurance for 2 $2000 cars than 1 $10000 one. I end up paying about $50/month in repairs overall, which is a tiny car payment by any strech of the imagination. And if I didn’t have the entire sum one month, I could leave the broken car sit while I saved for the repair.

    I know a blown engine or transmission could happen, although they happen so infrequently on cars of this age that the risk is relatively insignificant with proper maintenance. A local scrap yard would pay me $500 to junk it, so I’d end up “losing” $1000-1500 in the whole thing. Friends who have a late-model Odessey minivan just had major transmission work done for over $4k, and they only have 80,000 miles on their van.

    When a new ‘deal’ comes on craigslist, I buy it, perhaps swap out the tires if my oldest car’s are significantly newer and then sell the oldest one (one with the most miles).

    I know it’s not for everyone, and I’m glad! If too many people did this, I’d never find any deals!

  6. squawkfox says:

    Indeed, cars are not an investment. The last car I owned was about 13 years ago and it was a money pit despite the fact I largely employed the tactics in your article. Cars are just expensive, period.

    Since then I have lived car free. It’s not easy working around public transport, riding my bike to work, and planning ahead for groceries. It’s not easy but I have significant savings today. It’s not easy but it’s worth it!

  7. PJA says:

    What about safety? Aren’t accidents a top ten killer in the U.S.?

  8. Jo says:

    From my past experiences in working in the automotive industry and automotive finance industry… in addition to buying several cars my self. Best to buy used and I would always look for a certified vehicle that comes with a decent certification warranty. If you are going to buy a warranty from the dealer… negotiate, negotiate, negotiate… you would be suprised how much they mark them up.

  9. An average of 10,000 miles a year is pretty low. The national average is closer to 15,000. That makes gas mileage even more important.

    Buying an even older car is an even better deal. I bought my car with 140,000 miles and I’ll probably put a 100,000 on it myself. Reliability hasn’t been an issue. Since I bought the car for only $1750 my cost per mile driven will be very low. It isn’t much too look at but to me a car is just transportation.

  10. will says:

    great article – i think the last point would have had a lot more oomph if you said preparing to buy the car 5 years ahead of time would save you $2600 total instead of $10/week though.

  11. KC says:

    Car and investment should never be used in the same sentence – LOL!! I had an 89 Stanza that I drove til 2005 and I kept it in great condition. That came in handy when it was totaled (it was still driveable) cause I got more from the insurance company to get it fixed. The adjuster couldn’t believe how nice the car was (this was in 2001 – I fixed it and drove it 4 more years with minimal maintenance).

    Last year my husband’s 98 Civic was totaled – this time it wasn’t driveable and we didn’t want to salvage it. But we managed to get $7200 for it. That’s pretty amazing considering it was 9 years old and was only about $17k to begin with – we’d never done anything to it other than a new muffler.

    When we buy we look for 3 things. First it’d better start every time we turn the ignition – in other words reliability. Second – I have a trusted mechanic who only works on Japanese imports – so its Honda/Acura, Toyota/Lexus, Nissan/Infiniti, or Mazda for us. I really have a lot of faith in this mechanic and I’m not willing to bend at all here. In fact this guy chastised me for getting rid of my 16 year old Nissan and spending “all that money” on a used Acura – he said that Nissan had a good 100k miles left in it – that’s what you want from a mechanic – thrifty!

    The third point is we try to keep the car from costing us more than $2k/year not including gas, insurance, and maintenance. In other words if one of use buys a car for $20k, we’d better drive it for 10 years or a combination of years and resale value that equals $2k or less per year. Most people could get by on less, but the $2k fits our budget and allows us to have slightly nicer cars as we get older.

    We definitely got our money’s worth out of the Stanza and Civic, we’ll see how we do with the used TL I bought in 05 and the Camry he bought new last year (much to my chagrin).

  12. spencer says:

    Buying a late model used car is a great idea but I think it’s overused advice that doesn’t always save money.

    -New Corolla Pricing: http://www.toyota.com/corolla/trims-prices.html

    You can buy a new base model for $15,250 or step up to the LE for $16,650.

    -Craigslist search of used Corollas (dealer)

    Most of the used models are barely under $16,000. Unless you want to drive a Focus, Cobalt, or something else that doesn’t hold it’s value you’re not going to save much buying used.

  13. Laura says:

    By keeping my last car maintained, it ran for over 220,000 miles. I just got my 120,000 check up on my current vehicle and they were able to improve my gas mileage.

  14. Keith says:

    My cars now last 10 years (the trick is picking a car you will like for 10 years) and I am convinced it is due to keeping them clean, keeping them garaged (both at home and at work) and keeping them properly maintained.

    People overlook the importance of keeping a car garaged.

    My last car lasted until 238,000 miles and still looked great inside and out. I would still have it if it was not totaled in an accident.

  15. Faculties says:

    I appreciate this article. But do you get a kickback for mentioning ING Direct so often? It smells like product placement. Instead of saying “an interest-paying savings account” or “an online savings account,” you always say “into ING Direct” or “like my account at ING Direct.” Frankly, it makes me suspicious about your advice on other matters — I think: if he has bias in one matter, what other hidden kinds of bias are also influencing his advice? I think whatever money you get from ING Direct for mentioning their products in the text is not worth the credibility you lose. And if you don’t get money for all the mentions, I think you should drop them, because it makes you look as if you’re shilling for them. I really appreciate this blog and I hope you’ll think seriously about this feedback. I appreciate your aboveboard ethics in other matters and I think you could do better on this one.

  16. Investment = “the outlay of money usually for income or profit”

    A car is a depreciating asset not an investment, I think that is a big switch that would help people frame their car purchases. With that as a back backdrop, people should be more interested in losing as little money as possible to satisfy their needs.

  17. I really enjoyed the article and it is something I would have like to read before I purchased in December! Regardless, I would have never guessed the gas mileage money saved you mentioned. I know it makes a big difference but that is a ton of money in a hurry to save if you buy the more fuel efficient car.

  18. Shanel Yang says:

    I was planning on driving my current car to the ground, so I haven’t been giving as much thought to its maintenance. But, this post has made me realize that even for my own use — if I want to really make it last — I should not neglect this. Thanks!

  19. K says:

    If you’re on a tight budget, buying late model used will give you the best car for the least amount of money. But if you can afford to pay cash for a new one (in my case, I paid less for a brand new one including a 6 year warranty than any used one I could find anywhere) you will save money over the life of the car, and you will not have to worry about researching the history of the car or getting a lemon because there will have been no previous owner and all repairs will be covered for at least 3 years.

    Cars might be a bad investment as far as resale value, but considering that the majority of people wouldn’t be able to get as high paying of a job or buy things at reasonable prices, cars are a pretty good investment, as you have said yourself (https://www.thesimpledollar.com/2008/05/01/hyundais-dollars-and-sense-ads-my-take/)

    And with an older car, many people say “repairs cost as much as the car is worth, so I better trade it in.” This argument makes no sense. If your old car is worth $1000 and you have a $1000 repair every 6 months, your “car payment” is less than $170, which is lower than you would get on most cars, even used. Look at the total cost of ownership, not at the car’s “value.” (Reliability and lower gas mileage should also be considered, though).

  20. Trent Hamm Trent says:

    “Instead of saying “an interest-paying savings account” or “an online savings account,” you always say “into ING Direct” or “like my account at ING Direct.” Frankly, it makes me suspicious about your advice on other matters — I think: if he has bias in one matter, what other hidden kinds of bias are also influencing his advice?”

    I talk about ING Direct because that’s what I think about and know. It’s my primary bank and I’m very happy with it, so I talk about it. I think it would be dishonest for me to NOT talk about the bank that I use.

    Besides, if I were writing for kickbacks, I’d sure as heck not be talking about ING Direct. I’d be talking about WaMu – that would butter my bread right away.

  21. Matt says:

    The “buy a late-model used car that’s reliable” will prove harder than you think. Check out the selling prices of two year old Honda Accords or Honda Civics. You will be saving maybe $2000 on a car that already has over 20k miles, and two thirds of its warranty expired. The high resale values of Hondas and Toyotas mean that the compensation for buying used generally isn’t worth it.

  22. Melmar says:

    Just an FYI on those CarFax reports…My DH’s boss has a truck that was in two accidents, so they decided to do the CarFax report to see if they showed up. Guess what? Neither one was on there & one accident did quite a bit of damage to the truck. Your mechanic’s expert opinion on whether it has been in an accident could be worth far more than the CarFax report.

  23. Trent Hamm Trent says:

    “A car is a depreciating asset not an investment, I think that is a big switch that would help people frame their car purchases”

    A car is an investment. Without it, almost every car owner would see a vast decrease in earnings potential, far more than the losses incurred by the car itself. By being clever about the purchase, though, you can make it a better investment.

  24. Dave says:

    I also just went through a lot of research on car buying. I have a 1995 Civic with 214k miles on it, still in good condition. I’m willing to pay for some modern conveniences but how much is too much?

    One critical thing to factor in is the insurance costs. I’m currently paying $518/yr since the car is worth very little. If I buy a brand new Civic just like the one I have now, it would be $1164/yr! That’s an additional $646/yr that I’m saving by not buying a new car. Also, your DMV registration may go up.

    Ultimately, I decided to live with my car a while longer, at least until something major happens.

  25. T-Money says:

    New Cars: To get a starting bargain price check out carsdirect.com. This will show you any rebates available and the invoice prices as well as options pricing.

    If the dealer asks you what kind of payment you want, don’t answer. They can really mess with you on this. First, find out how much you want to spend on a new car(i.e $30,000) then get pre-qualified for a loan at a credit union. This will give you a better understanding about what your paymentmay be. After you have this information then all you need is confidence because confidence goes a long way in stiking a deal. You have to go into the dealership with a price you want to pay(keep this to yourself), ask them for the best deal they can provide on the car you want and then tell the dealer that the car is sold if they will accept X amount. At this point you have to willing to walk out and actually tell them that dealer ABC down the road may want to make a deal. this process will ensure that you get the car for the price you want to pay. FYI- I bought a 2005 Mazda RX-8 GT(in 2005) with 4 miles on it for $27000. The invoice was 29000 and the MSRP was 35000. I used this process at two dealerships. The first one did not want to deal so I went to the second. The first one called me one week later…too bad for them.

  26. Johanna says:

    “A car is an investment. Without it, almost every car owner would see a vast decrease in earnings potential”

    I think that’s an overstatement. 20 percent of Americans have access to public transportation, but only 5 percent use it to commute to work. So that’s 15 percent of Americans who could get by without a car but choose not to. A minority, to be sure, but not a negligible one.

  27. Jeff says:

    Automobiles are nothing more than consumable goods. Tools in a toolbox. I say drive them till the wheels fall off and then go get another. I guess I have never understood the love affair some people have with automobiles. The treat them as objects of desire. I really get a kick out of my neighbors that waste so much time washing, waxing, and detailing. I can think of 100 better things to do. I think some of the comments here are very interesting. Thanks for writing such a good blog.

  28. Ben says:

    “A car is an investment. Without it, almost every car owner would see a vast decrease in earnings potential”

    It’s not an overstatement, it’s just ridiculous. And I’m not even talking about investing the money that what would have been wasted in a car.

  29. Rick says:

    I agree that a car is an investment, but public transportation is simply not an option for most people in America. Johanna says 20% of Americans have access to public transportation. Well, sure, I have access to it, but the bus simply does not go between my house and my job. Riding my bike is still an option, though.

    A car is still an investment, though, because a car buyer is investing in his time and convenience. Without my car, sure I could ride my bike to work every day. But that would take more time and energy. It would be more difficult (though not impossible) to buy groceries (in my hilly city, pulling a bicycle trailer is extremely difficult). It would be less “cool” to go on dates without a car.

    Yes, a car is indeed an investment, just not a strictly financial one.

  30. Solomon says:

    My car has actually gone up in value since I purchased it. It’s a classic, and by taking care of it and adding a few things that improve it (that i get use out of every time I use it), it’s actually gone up in value by nearly half as much again.

  31. Andy says:

    Johanna, Rick,

    Cars, bikes, and public transportation are all investments.

  32. Johanna says:

    Even if you have your reasons for choosing not to do a carless commute on a regular basis, please consider giving it a try this Thursday, June 19th, for “National Dump the Pump Day.”

  33. Eve says:

    I agree with the advice to buy a late model used car, but maybe folks should think twice about going to a dealer.

    If you don’t need to replace your car immediately, but you know that you’ll need to in the next few months or years, you can keep an eye on the used car listings in your local auto trader, craigslist, etc., until the type of car you want becomes available from a private individual. This cuts out the dealer as a middleman. Of course you’ll need to have your mechanic inspect the car before you buy it.

  34. Jules says:

    I’d have to add “know what you want and stick to it” to that list. That is, you should be able to walk up to the salesman, quote a bunch of statistics, and he should be able to come up with several models that meet most, if not all of them. When I’ve had to make major purchases (laptop, cell phone) I do my research, know what I want, and don’t settle for less. More, OTOH, is quite fine by me….

  35. Bill says:

    If you want a new car, don’t bother going to a dealer in person when you are ready to buy.

    Use a car buying service (e.g. Costco’s), or contact various local dealership’s “internet sales” person by email.

    You want to divorce your emotions from the new car buying process, something that is very hard to do in person on the dealer’s turf.

    As for me, I drive used cars into the ground.

    One of my favorite sites for beaters is:

  36. Onaclov2000 says:

    I don’t know about you, but when I find something that works VERY WELL for me, I tend to talk about it a lot, whether that’s a good idea or not, I do it because I find it works best for me and I want other’s to know about it.

    Since Trent’s blog is about (in my mind) improving your life while spending as little as necessary, I hope that he does push something that works so well for himself, some people need the push.

    I’ve actually been considering moving to one of the online banks and when I find the one that works best for me I’ll gladly tell my friends and family (and if I blogged my readers).
    ight now I just have money sitting in a MMA at Sharebuilder.com and paypal.com cause they have better interest rates then my savings account at WellsFargo.com, I would NEVER tell someone to try going to wellsfargo to save money, but I find I always am telling people to put their money in something that earns better interest then where they’re at now, frequently that’s followed by…”Hey you should check out Sharebuilder.com or paypal.com, they have MMA’s and they’re better interest rates then anywhere I’m currently involved with”.

    Not everyone pitches an idea they really like because they’re getting kickbacks, some people do it because they care and know what works for them and want other people to succeed.

    If Trent didn’t want that he wouldn’t have the following he does, I am sure I wouldn’t be reading his blogs every day if that was the case.

  37. Onaclov2000 says:

    Dang I guess I am a little late, that’s what I get for my first post…..lol, Sorry

  38. Lurker Carl says:

    Investments are expendatures designed to generate income or enhance business. Personal transportation does neither.

    The mode of transportation to a job site does not make that vehicle an investment. Your legs are not investments because you choose to walk, your car isn’t an investment because you choose to drive. Even if your co-workers tag along and offer to pay for the privilage of riding with you, that car still isn’t an investment.

    When the vehicle is used as a bus, delivering heating oil or an electrician’s service truck; only then does it become an investment because it is directly involved with income generation.

    The Internal Revenue Service concurs.

  39. Ben says:

    > Well, sure, I have access to it, but the bus simply does not go between my house and my job.

    Huh? Keeping both *this* job and *this* house are your choices, you could drop both to get better ones. If public transportation is not an option, it’s because you decided to choose a situation where it isn’t. (which is perfectly fine, but it’s your choice, it’s not that it’s “not an option”).

  40. Keith says:

    “I think that’s an overstatement. 20 percent of Americans have access to public transportation, but only 5 percent use it to commute to work. So that’s 15 percent of Americans who could get by without a car but choose not to. A minority, to be sure, but not a negligible one.
    Johanna @ 11:21 am June 17th, 2008 (comment #26)”

    Curious where you got those percentages. 1 in 5 have access to public transportation, but that statistic does not indicate how many out of that 20% need to commute to work or even how many of those work. In addition, having access to public transportation does not necessarily mean it will take you everywhere you want or need to go.

  41. Keith says:

    “Huh? Keeping both *this* job and *this* house are your choices, you could drop both to get better ones. If public transportation is not an option, it’s because you decided to choose a situation where it isn’t. (which is perfectly fine, but it’s your choice, it’s not that it’s “not an option”).
    Ben @ 1:48 pm June 17th, 2008 (comment #39)”

    That is not an entirely fair assessment of that persons situation. Easy to say just pick up and move or change jobs to access public transporation, but the reality of selling a home (without taking a huge loss) or getting a “better” job may not be so easy and quick to find in some areas.

  42. schreibs says:

    On doing oil changes yourself:

    There’s an abundance of coupons for the quick oil change places. I often find them for 18-20 bucks. My vehicle takes 5 quarts of oil which I get free with the oil change. So it’s like buying the oil and having someone put it in your car for free. It’s not always cheapest to do it yourself.

  43. Stephanie says:

    Thank you #22!!!!

    I was fortunate and unfortunate with CarFax. I bought a used Miata several years ago and I knew a person who worked at another dealership that had access to CarFax without me having to shell out money for the report. She said the car came back clean.

    I had my then boyfriend (the shade tree mechanic type) check out the car. He said it looked clean. So I made the purchase.

    First time I tried to put gas in it, the gas cover wouldn’t open. Since it was still under factory warranty, I took it to the Mazda dealership. Turns out that the car had indeed been in a wreck and a good one at that. But since the folks didn’t claim it on their insurance, there was no report. I wouldn’t trust a CarFax as far as I could throw it!

  44. Keith says:

    How do you properly dispose of used oil and tranmission fluid when you change it at home?

  45. KoryO says:

    Well….got a thirteenth point to add. If you are going to buy a used car, never ever get a former rental car.

    I can’t remember which comedian said it, but “all rental cars are SUV’s”. They will be subject to more abuse in a shorter period of time than normal cars. That will affect the lifespan of the car, and you are likely to have higher repair costs, too.

    It goes double for former police cars. (Yes…I worked for a police department. No….not gonna share the stories. Don’t want some of my buddies to get into trouble. ;) )

  46. Johanna says:


    “Curious where you got those percentages.”

    I got them from here: http://news.yahoo.com/s/csm/20080616/cm_csm/emasstransit
    Granted, I don’t know where they got them from, and it’s all a bit vague (I’m not sure what they count as “having access” to public transportation) but the specific numbers aren’t that important. The conclusion remains the same: The number of people who could get to work without a car but choose not to is not insignificant. If you ever spend any time in the DC area you know what I mean.

    “1 in 5 have access to public transportation, but that statistic does not indicate how many out of that 20% need to commute to work or even how many of those work.”

    You could, of course, ask the same questions about the people who lack access to public transportation.

    “In addition, having access to public transportation does not necessarily mean it will take you everywhere you want or need to go.”

    True, it doesn’t necessarily mean that (although I think that in most cases it does). But I was responding to Trent’s statement that without cars, “almost every car owner would see a vast decrease in earnings potential.” Which is false, because anyone with access to public transportation can commute, if not necessarily to their present job, at least to *a* job.

  47. Trent, a previous commenter pointed out your glaring oversight of any safety considerations. I concur! My car-shopping formula is exactly the same as yours, except with safety as the next-most-critical characteristic after reliability. http://www.iihs.org was my primary source for safety data, supplemented by http://www.safercar.gov (which is less clear than IIHS) and Consumer Reports (which is less complete than IIHS).

  48. Dave says:

    If you save 20-30 bucks changing your oil yourself, you’re getting ripped off. Or, you neglected to include the price of buying the oil and filter when you said that, Trent.

  49. Jack says:

    “airing up your car tires” – I’ve never heard ‘air’ used as a verb like that before.

  50. Jim says:

    Don’t change your oil by yourself. It’s more hassle because you have to get rid of the oil and it will really only save you $5. Plus there is your time… Oh, and if you mess it up, it’s on you and not the garage.

  51. chris says:

    After using a car for 2 years, I have just stopped using it to commute to work. I catch the bus instead. Now it’s a lot less hassle in terms of fuel price, accidents, traffic, driving, repair etc. We only take the car when and where we *need* to.

  52. gr8whyte says:

    Excepting collectibles, cars are not investments. Cars will never appreciate in value while investments can. Commercial widgets that see use, wear out, have to be repaired/replaced when they fail and have a known history of depreciation are not investments. Widgets like airplanes and washing machines. While one should shop around carefully for the best value/deal like one would for any appliance or mutual fund, cars don’t qualify as an investment in the usual sense of the word unless you want to quibble with semantics. A really good set of furniture (old-growth hardwood, master craftmanship, etc.) can be considered an investment that can be handed down to the next generation but it’s in a protected environment (a home) and not speeding down the highway at 75 MPH. There’s no way I can be convinced a car, excepting collectibles, is an investment.

    Re. buying used late models, I’ve tried it, gave up and decided that buying new and running them into the ground was a more realistic strategy because it was next to impossible to find used late models with what I want on them.

    “Driving the speed limit not only cuts down on the cost of speeding tickets, but it also reduces the wear and tear on your car.” does not sound right. Wear and tear are aggravated by high forces that are generated by acceleration, not speed, assuming “normal” speeds. Remember F=m*a? Higher acceleration generates proportionally higher forces on components. Want your car to last longer? Accelerate and brake gently.

    If you change your own oil, I suggest trying pure synthetic oil at least once, especially in the wintertime. Engines run sluggishly when cold for a variety of reasons and one of them is the viscosity of the oil (not to be confused with the SAE grade). Synthetic oil has a lower viscosity over a wide temperature range compared to a regular oil of the same SAE grade. Made a huge difference in how my Civic drove when the engine was cold, especially in the wintertime. Most engine wear also occurs during the first few seconds of starting. If you want your engine to last forever, you can install an after-market oil pump kit that circulates oil throughout your engine for a few seconds before you start it. Lacking this pre-start lubrication, the next best thing to do is use a synthetic oil that can be pumped through the engine easier/faster than a regular oil because of its lower viscosity. Disclosure : I make no money regardless of what oil you use.

  53. Shevy says:

    You said:
    But I was responding to Trent’s statement that without cars, “almost every car owner would see a vast decrease in earnings potential.” Which is false, because anyone with access to public transportation can commute, if not necessarily to their present job, at least to *a* job.

    So, if a programmer couldn’t get to his high tech job on the bus he could still get to *a* job at the local Walmart or fast food place because the bus goes right by there? I think that fits Trent’s statement about “a vast decrease in earnings potential”.

    And @KoryO

    If you are going to buy a used car, never ever get a former rental car.

    It goes double for former police cars.

    Actually, I’ve had both and loved them. The former rental car, a Buick Century that had been used for about a year, saved my life (and those of my mother and kids) when we were in a serious MVA many years ago.

    The former cop car was long, long ago and it was just plain fun. It was a former freeway car with a 440 Interceptor engine. ‘Nuff said.

  54. Carmen says:

    I would never use the term ‘investment’ and ‘car’ together. Although I’m sure for the uber-rich they often can be! Thus most people purchase a car, which is an expense, not investment.

    I found your comment regarding brand reliability very interesting – Honda, Toyota & VW. Japanese cars are certainly reknowned for their reliability. Yet I an amazed VW scored poorly! It makes me wonder where that leaves the mass market brands, including Ford that was mentioned shortly after? Or maybe something like a Ford scores well on reliability but not so well on other important factors such as safety and quality of build. Having had one Ford and three VW’s so far, one is a much more enjoyable and high quality car brand to drive than the other!

    Ultimately one looks at a car satisfying a whole host of criteria. Safety is high up my list, especially now that I have children.

    German & Italian cars are reknowned for quality (unlike Japanese brands) and thus VW, Audi & BMW are my brands of choice for cars. But not cheap admittedly.

  55. KoryO says:

    Shevy, I’m glad you were lucky with your cars.

    I still know three people who have had nothing but repair after repair with their old rental/police cars. Maybe a highway patrol car, which is what you sound like you got, is different. City police cars…..no way, Jose.

  56. Dean says:

    “If one model gets 18 miles per gallon and another car gets 28 miles per gallon,”

    Are those really good numbers to aim for? The 14 year old bottom of the range Ford I just got rid of got 30-35 miles per (British) gallon. My parents two year old diesel Renault gets 50+ mpg

  57. Johanna says:


    If there is a metropolitan area that lacks any transit-accessible programming jobs, I’d like to know where it is.

  58. Kate says:

    Having been burned with used cars I always buy a new “stripped down” model. I have the kind of windows that you have to actually roll down and manual locks. My figuring is that reaching over to lock and unlock doors is good exercise, and not overly time consuming in a Toyota Corolla. There are times that I think it might be nice to have electronic everything but then I think about how much it costs to fix if it breaks and that a car really is only to get from point A to point B.
    A friend of mine has a stripped down Toyota like mine and one of her daughter’s friends didn’t know how to “roll” a window down–she hadn’t ever seen anything like that before.
    It is my experience that Consumer Reports does not view Volkswagons is a favorable light. It is also my experience that Consumer Reports focuses more on the short term reliability rather than the long term. I used to love Consumer Reports but not so much anymore.

  59. ACaminante says:

    “How do you properly dispose of used oil and transmission fluid when you change it at home?”

    Most auto parts stores (and some mechanics, junk yards and haz mats) will let you drop off used oil for free. Buy an oil drain pan with a lid ($5), fill it up, and take it with you the next time you go by the auto parts store.

    RE: it’s cheaper/faster to pay someone to change your oil instead of doing it yourself

    I find those 15-min oil change places usually completely overfill my oil, which can damage your car. After you learn how to change your own oil, it usually takes about a half hour. Most of the time spent changing your own oil is waiting for the oil to drain into the pan, so while you’re waiting you can clean the inside of your car, clean the air filter, and do other chores and maintenance. All you need is the oil, the oil filter, a drain pan, rags, a socket wrench, and an oil filter wrench (another $5). Depending how high your car is off the ground and where the oil drain plug is located, you might need to buy a jack and stands or drive-up ramps.

    If changing the oil really does only save you a measly $5 instead of the $20 or $30 Trent suggested, then you just saved $5 for about 15 extra minutes of your time. That’s $20 an hour. I doubt you can recoup that money while waiting in Jiffy Lube, reading back issues of Time magazine.

  60. Keith says:

    Johanna said:
    “But I was responding to Trent’s statement that without cars, “almost every car owner would see a vast decrease in earnings potential.” Which is false, because anyone with access to public transportation can commute, if not necessarily to their present job, at least to *a* job.”

    It is not entirely false. He qualified it with “almost” meaning it does not apply to everyone. Saying “anyone with access to public transportation can commute” is over-inclusive. Without a clear definition of what “access” means, it is difficult to quantify who this even affects. Technically, I have access if I drive 10 miles to a park and ride facility. This increases my commute time from 40 minutes to over an hour.

    Changing jobs would not make a bit of difference as the train stops outside my office. Changing houses might be a viable option if I didn’t have to take a hit due to a soft market and I was willing to spend $100,000 more to get into an equivalent house closer to the rail line. I would still need a car to get to the park and ride facility and my car would have to sit outside and be exposed to the elements.

    Riding a bike to the park and ride facility is not an option since showing up all sweaty in a suit does not really inspire confidence with my clients. That alone may produce a vast decrease in my earnings potential.

    Certainly, this is the exception and there are people who could easily make public transporation work, but claiming “anyone” can make that shift and implying that it is an easy decision is grossly over-simplified.

  61. Interested says:

    We sold our 18-year-old truck (original owners) last year so we could buy a more fuel efficient car. We did some research, including carfax, and bought a “salvaged” 2006 Honda CRV from a salvage repair company. The car only had 2000 miles on it (it was apparently bought in late November and in a wreck on New year’s Eve). The car was certified by the California Highway Patrol after repairs. We have been driving it since then with no problems whatsover! It has been a very cost efficient purchase for us.

  62. Shevy says:


    While I can’t tell you about a major metropolitan area with no transit-accessible programming jobs, I did once work in a large industrial park near an international airport that had no transit anywhere near it. You had to have a car to get to work and companies in the area even included that fact in job ads.

    And, no, I couldn’t have obtained another job back then. I was pregnant and this was at a time when you could be fired for being pregnant. I needed to get a minimum of 26 weeks in so I could qualify for maternity benefits.

    Sometimes people have personsal circumstances that tie them to certain places or jobs for a period of time. What about a person with fantastic health benefits and a critically ill family member? He or she wouldn’t quit that job just to be able to use public transit!

  63. Ben says:

    > That is not an entirely fair assessment of that persons situation. Easy to say just pick up and move or change jobs to access public transporation, but the reality of selling a home (without taking a huge loss) or getting a “better” job may not be so easy and quick to find in some areas.

    Well, usually you only need to change one of them. And for the house, there again it’s a choice to own rather than to rent.
    Of course there are cases where it’s just not possible, but the statement was “for most people”.

  64. MJ says:

    My last car was a 1985 Pontiac 4 door boat, I drove it for 16 years, changing the oil every 3 months or 3,000 miles, I continue to do this with my new car because it keeps everything greased and has saved me trouble when the guy changing the oil says looks like your water pump is leaking, or something else needs attention. This means I change my oil about 4-5 times a year at a cost of $25 to $30. These people have never sold me anything but an oil change and wiper blades, I had to go to my regular mechanic for the water pump. My “new” car is a 2000 Lincoln Continental that was an executive car, new it was $45,000, when I went to the dealership they had just come back from an auction and had 25 cars, different makes/models, that was in November 2001. I sat in it, drove it, liked it, I went home with a copy of the sticker and called the Credit Union and told them what I found and that it has 25,000 miles on it. My loan officer called back and said the price was in line and I had no problem getting the loan, let them know. One week later I drove back to the dealership, it was still there, drove it again and sat down to negotiate, by that I mean I told the sales person I had a price in my head, what do you want for the car, nope not close, try again, I would not go one penny over the price I had decided on and I didn’t tell him the price I had in my head. I said you have 3 chances and I walk, I don’t have all day and cars are a dime a dozen, just look at your lot and I don’t need a car yet. I walked away spending shy of $24,000, license, tax, title, additional 5 year 75,000 mile warranty, a 6 changer CD player installed, a years’ worth of oil changes (4 total) and written into the contract was if there was ever any work needed to be done on my car that would last more than one hour they would supply me with a car to drive. It is top of the line, heated leather seats, the works. It now has 67,000 miles on it and is 8 years old, I plan on driving it at least another 8, it looks brand new and because cars don’t change much from model year to model year, most people are surprised it is that old. It’s a V8 and according to the computer I get 20.5 miles to the gallon, by the way the loan officer wanted me to negotiate for his next car. I just put on my first set of new tires and a battery, last time I got my oil checked they guy said I had plenty of tread left on the tires, I stretched it a little far but I don’t “Jack Rabbit off the line”, I coast if I see the light is changing or traffic is backed up and rotate them every 6 months. I will never buy a small car, my life is more valuable than $4 a gallon, my friend just traded off her 4-wheel drive truck for a Camry and was hit in the side, needless to say she would have fared much better in her truck, plus the truck was almost paid off, she got nothing for it because it was a big gas hog, dealer quote. Oh what did I do with my old car, I drove it till it dropped and sold it for $65 to the scrap yard, keeping my new car in the garage all winter. Quote from my Dad, don’t drive the wheels off, for every mile you drive, you have one less left in the car.

  65. anon says:

    “Riding a bike to the park and ride facility is not an option since showing up all sweaty in a suit does not really inspire confidence with my clients…”

    You’ve clearly put little thought into a solution to the problem you present. A cursory google search for “biking to work” or similar will return results from people who have.

  66. Keith says:

    “…public transportation is simply not an option for most people in America. Johanna says 20% of Americans have access to public transportation. Well, sure, I have access to it, but the bus simply does not go between my house and my job. Riding my bike is still an option, though.”

    I agree with Rick (comment #29). If the statistics Johanna listed are correct, only 1 in 5 Americans have access to public transportation. That alone makes access not an option for most Americans. Access is not defined, therefore it is difficult to ascertain who is considered to have access.

    Interestingly, ridership is up substantially in many metropolitan areas, which is causing a space issue on trains and buses. I attempted to take the train about a year ago and there was literally no room for anyone to get on the train at my particular stop. We had to wait 10 minutes for the next train. I can’t even imagine how bad it must be now.

  67. Keith says:

    anon said:
    “You’ve clearly put little thought into a solution to the problem you present.”

    Ok, I’ll play…

    “I am a multi-modal commuter. I live approximately 30 miles northeast of downtown Dallas. For the past three years, I have bicycle commuted the first 10 miles to the nearest DART rail station. I store my bike in a locker I rent from DART and ride the train the remaining 20 miles. And, the reverse in the evenings. I was even named the 2007 Clean Air Cyclist of the Year for the Dallas area for finding ways to make multi-modal commuting work.
    It’s a hairy commute to say the least. I ride on a four-lane highway crowded with bumper to bumper traffic. The road has a shoulder for most of my ride so I have a safety buffer. Unfortunately the three miles through Sachse, TX do not. I squeak through next to the curb. I used to pass the traffic on the right, which was (1) dangerous, (2) irritating and (3) illegal. Used to: that is until I was pulled over by a motorcycle cop. So embarassing… Crossing the on/off ramps for the George Bush Freeway are the scariest parts of the ride as traffic is coming from all sorts of directions. But, I try to ride safely and clearly indicate what I’m doing.
    I cool down on the DART train, shower at a health club and start my day energized. I use a backpack to carry my work clothes, my laptop, and clothes for riding home. Luckily, I see the same people most days so I seldom have issues with frustrated drivers. I wear a sign on my backpack which says “100 miles per gallon of Monster.” Which I think is pretty funny!
    Hope you enjoy my story.
    KSDisque, Wylie, TX”

    Now how do I get my young children to school?

  68. anon says:

    Thank you for doing some due diligence.

    As for the new point to which I never made any reference to previously, does the school district you’re in not have a school bus system? If so, does it not come anywhere near to where you live? Many children ride the bus from elementary onward, and there appear to be buses for preschool as well. So again, unless your circumstances are very unusual, that is another solution.

    Also you could consider arranging a carpool with any parents in your neighborhood or similar whom you know and trust. If you don’t know any people, then you could probably reasonably take action to change that. I’m sure Trent has some articles here regarding building relationships with your local community, as he is very keen on that as a personal value. If he doesn’t have any articles here I’m sure that if you requested it, he would write one or more articles on the matter. And of course you can search for ways to build local/neighborly relationships.

    Also, Google searching “carpool” leads to sites that are dedicated to helping people find car pool matches for their needs and locations. That too would aid you. Unless your circumstances are very unusual, you can probably find an arrangement that will benefit you and everyone else involved.

    Also, here’s some food for thought –


  69. Michael says:

    A car is a tool, get’s you from one place to another … hopefully in one piece. Hard idea to get across, especailly to young folks. I’ve always paid cash, and except for the rental cars mentioned below, have usually purchased something eight years or older. You can save a tremendous amount of money on insurance, and if your doors get dinged now and then at the grocery store, so what.

    I save money changing my oil because I live in a rural area, and don’t have any of the chain oil change stores nearby. Don’t have the time to have the car locked up for half a day or so at a shop for an oil change. Autozone takes the used oil and recycles it for free.

    If you are determinied to buy new, do a lot of research on what actual cost is. Then use fax or email to get the best offer before you ever set foot on a dealership floor – Edmunds.com did a good story on that a year or so back.

    Koryo – I’ve had good experiences with two rental car purchases, both from Hertz. I purchased a one-year old Toyota Corolla and got 175,000 miles out of it before I sold it to a co-worker. Probably would have lasted even longer if the woman’s teenage daughter hadn’t wrecked it six months later. The other rental purchase was a one-year old Nissan Altima – only kept it for two years due to a divorce but had no problems with it. In both cases I did oil changes about every 3500 miles. Hertz will let you look at all the maintencance records for a vehicle prior to purchase, they also keep records of fender-benders so you can see if a vehicle was crashed, what repairs were made, etc. I’m not so sure about buying from the other car rental companies.
    Usually police cars are pretty reliable, most were maintained to a pretty high degree, and the models sold as police sedans are “overbuilt” for long service – there’s a reason you see a lot of taxi companies purchase used police cars.

  70. Emy says:

    @Faculties #15

    Wow, learn some manners. It’s one thing to ask if someone is receiving payments for advertising within their content. It’s another to more or less accuse them of it with no evidence whatsoever, being sure to cast aspersions on the person’s ethics at the same time.
    Trent is providing free advice to you and as I recall him saying elsewhere, it is your responsibility to check out other sources, especially if you feel something is suspect. Also, all sources are biased in hidden ways, many times unintentional. That (I assumed until now) is a no-brainer.
    Heck, here is another source for you: I’ve used INGDirect for 6-7 years and love it–he would indeed be remiss in not mentioning it. Its rates are not always the highest of all the high-interest internet banks, but it has consistently been far above what I get at my B&M bank, and the interface (except the log-in) and reliability are great. I’ve used Sharebuilder for 4-5 and have similarly had a great experience (SB was just purchased by ING and it is even better now; before it was a bit lower budget and didn’t have all the extras like Quicken compatiblity.)

    Trent, this is my first time commenting but I’ve read through a great deal of your blog…thank you for your efforts; I do hope you keep up the good work despite those who feel the need to be rude and hostile to people who give of themselves.

  71. Rob O. says:

    I’d second the notion of proper upkeep making the most of your investment in your car. Certainly, you want to be diligent about the mechanical maintenance, but you’d also be surprised how effective washing & waxing (by hand) can be at mitigating weather’s nasty effects on your car’s finish. And really, gone are the old Turtle Wax paste days when waxing your car was a monumentally laborious feat. The liquid waxes available now are easy and essentially foolproof to apply and make your car look like a million bucks!

  72. Macinac says:

    My pattern is to buy an unpopular orphan and drive it until it wears out. If I can afford it, I buy new, but look for bargain situations. In 1999, for example, I bought a new Nissan Maxima for 20% off because they were overstocked with a dead end model about to be obsoleted. I still have it. In 2007 I bought a new Mercury Montego for 40% off because it had hail damage dings all over it. The glass had been replaced but it was ugly due to the pock marks. This car was otherwise in new condition. I have not repaired the dings because I credit them with saving me 12 grand. They’re valuable!

    In 2004 I finally sold for $5 my 86 Saab that was rusty and run down and had over 400,000 miles. But it still worked, so I think the buyer got fair value. I had to do it: my wife was getting embarassed.

  73. Trent, you may disagree with me but cars will always be a loss of investment once they are driven off the lot.

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