Should students invest heavily in a car?
A very simple but often overlooked fact about buying cars is that they are not exactly investments at all. A car, in general, is considered an asset, not an investment, irrespective of how much money someone pays to buy it. As a student, it makes little sense to put too much money into a depreciating asset because, in most situations, you are not anywhere near your peak earning capacity, or may have not even started to earn yet. Student debts are a problem in the UK right now, so there’s little point in adding unnecessary debts to your tally.
Buying a car is not an investment!
Cars are not considered investments because, under normal circumstances, the owner cannot make a profit by selling it, as it loses value from the very day the vehicle leaves the dealer’s shop. This makes buying expensive cars a bad “investment” choice for students who are not yet earning to their full potential.
Areas of proper investment would include property, certified gold/platinum/silver, cryptocurrency, etc. because they have a high chance of returning profit. It is perfectly possible for property, cryptocurrencies, shares and other potentially profitable investments to backfire as they often do, but there’s also a good chance that the owner will make a huge profit by selling them later on and that chance of profitability is what classifies these as investments.
Vehicles are assets
On the other hand, every car is an asset because they can be sold for a large sum of money right away, even though it would be a loss in comparison to the cost price. In fact, the ongoing financial pressure of heavy monthly instalments often forces students to forfeit their cars and may even hamper their careers. Holding a part-time job at the local Starbucks will not be enough to pay off huge car loans and always worrying about how to pay the next instalment, in addition to every other expense is going to make it hard to concentrate on your studies.
Should students skip expensive cars altogether?
If you need a car at university, then buying a used car is probably the best option, where you can get a reliable smaller car like a VW Golf a few years old for under half the price of a new model. However, if you do want to ride around in something more exciting and have a side-job giving you some money to spend, then you could also get a deal like the Porsche leasing deals offered by Vantage Leasing on models like the 718 Boxster or the Panamera, where you could have the car for three years for far less than buying new. Of course with, a licensing deal means you will never own the car, and will have to return it at the end of the lease deal – which can be as short as two years – but if you’ve got the money that’s two years of riding around in a Porsche!
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