How To Make Money Of Cars

Cars are often one of the most expensive single items that we might need to purchase. You might hear someone say that they are “investing” in a good car. But can you make money of cars?

Often when people say they have invested in a car, it is meant as that they’re paying more for better quality and reliability now so they can have it longer, rather than having to replace it soon after, or worse, spending thousands to fix problems.

Although the words investing and an investment are often used this way, this isn’t really proper use of the terms. An investment is something that makes you money, or something that goes up in value (so later you can sell it for more than you bought it for).

(For your interest, here is price guide for new cars in New Zealand and here more information on why cars lose value.)

Is your car an investment?

The sad truth is that in general, cars go down in value.

Often even quite significantly as soon as you drive a new car out of the dealership’s property.

On top of this, they don’t make you any money either.

In fact, owning a car will cost you. Think of petrol, maintenance, insurance and interest, if you bought your car with a loan.

So, cars are rarely real investments. They don’t have capital gains (go up in value) and they don’t make you money.

But can you make money of cars?

As with everything though, there are some exceptions.

My partner is very interested in cars and they are pretty much his hobby.

Well, he is mainly into Japanese cars, more specifically Toyotas.

A year ago he sold a 2010 Toyota Hiace (a van) after owning it for nearly a year, profiting a few thousand dollars. Even after financing costs were accounted for.

After telling a few friends, they were quite surprised and curious on how that would happen. After all, cars notoriously only decline in value.

How it might be possible to make money of cars, our experience

First of all, let’s look at some numbers.

He bought the van for $19,000, put down $5000 and financed the remaining $14,000.

In 2020 when he bought it, these vans were already going up in value. A year later he sold it for $23,000.

So why was that happening?

There are a few reasons.

First of all, the 2010 model was one of the last ones to have the classic Toyota Hiace shape. The newer vans are a bit wider and boxier, and kiwi tradies tend to prefer the old style (my partner being one of them).

The major reason for their value going up is though that the older models don’t have high enough NZ safety star rating and thus, they are no longer being imported into the country.

On top of that my partner’s van was top of the line model (performance, power etc. when it came to heavy loads), low kilometres for a Toyota Hiace and in great condition, inside and out.

So the reason he was able to make his money back and more on a vehicle was because this particular one has a steady demand with a decreasing availability of ones in good condition.

My partner did his research into this which is why he knew to ask what the van was worth, and that’s what he was paid.

Was it a fluke though?

In general, it is true that cars go down in value, but if you know the supply and demand features in your area/country, there might be some money making opportunities (although they could be rare).

This isn’t only relevant to cars though, but any collectibles really.

While my partner’s van wasn’t a collectible per se (it being for practical purposes), it had unique demand and supply features which my partner understood.

Similar is usually true for collectibles.

Have you ever made money on something that everyone says you can’t make money on? I’d love to hear in the comments!