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A car is a depreciating asset, how can it be an investment?

If you or I were to buy a typical mid-price vehicle for £14,000, that car would impress our neighbours for about a month on our driveway. However, eventually the novelty starts to wear off. After a while even we will get used to having a brand-new car on the drive and eventually, we no longer think about it until when we consider selling it. We then start to check all the websites and dealers to see what this car is worth. If we happen to be selling it after 3 years, according to the AA, that vehicle will be worth around 40% of its new value. So that car is now valued at ££5600. 

If instead of buying a new car for £14,000 you were to invest in one single vehicle with Buy 2 let cars, your capital will have gone up to £17,033. There will be no impressing the neighbours, but your bank account will have swollen by a cool 22% over the 3 years. 

What’s the moral of the story?

A car for vanity is just that, while a car as an investment with Buy2LetCars is a business. 

We buy brand new vehicles with investor’s money and attach a 3-year rental contract to it where nurses or other public sector workers will drive it. This turns a depreciating asset into a money machine making you between 7% IRR to 11% IRR per annum. 

According to the FLA (Finance and Leasing Association) 92.7% of new vehicles registered up to Dec 2019 were bought on finance, in other words the banks use your money to fund a depreciating asset. They then charge customers in some cases 49.5% per annum to fund this depreciating asset and pay you and I 0.1% per annum for the use of our money.   

Call 0203 823 1043 or email r.greenland@buy2letcars.com to book your 20 min no obligation investment overview.

R.Greenland, Funding Consultant.

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