Buying a Used Car Can Actually Earn You Thousands of Dollars — Here’s How

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With few exceptions, cars are depreciating assets. Unlike stocks and other investments, which are expected to appreciate in value over time, cars generally lose value from the moment you buy them.

But there is a smart strategy you can use to make your car purchase worthwhile from an investment standpoint. In fact, when done properly, buying a used car can actually earn you thousands of dollars. Here’s how.

The Strategy

The way to earn money from buying a used car is to take the money that you would have spent on a new car and invest it instead. With the average new car price now exceeding $48,000, spending just $10,000 on a used car instead can result in significant savings — savings that can translate into tens of thousands of dollars when invested over time.

The Numbers

According to Experian, the average monthly payment for a new car in Q1 2025 was $745. Here’s a look at two scenarios for your money: financing a new car versus buying a $10,000 used car.

Financing a $48,000 New Car

• Down payment: $9,600
• Loan (after $20,000 down payment at 6.73%): $755.48
• Total payments, including down payment: $54,928.80
• After five years: Your now five-year-old car is likely worth about $24,000 or less.

Going this route, after five years you would have spent roughly $55,000 and have an asset worth perhaps $24,000, giving you a financial loss of about $31,000 over that time period. Certainly, there’s value in the use and enjoyment of the car you had for five years. But from a strictly financial point of view, it’s been a costly five years.

Buying a $10,000 Used Car and Also Investing 

• Down payment: $10,000
• Loan: N/A
• Total payments: Investing $755.48 per month for five years plus the original down payment equals a total of $55,328.80 (though returns can obviously vary)
• After five years: Your used car will likely still be worth $7,000 or so, although a wide variance is possible based on the year, make, model and condition. But on the investment side, you could end up with about $55,510, if the $755.48 you set aside every month earned an 8% average annual return.

In either scenario, you would spend or invest about the same amount of money, and you’d end up with a car. But if you buy the new vehicle, you’re about $31,000 in the hole after five years. If you buy a used car, you’d end up with over $55,000 in your account, thanks to your investments.

How Does It Work?

The simple magic of this scenario is that instead of putting all of your money into a depreciating asset, you’re putting most of your money into investments that rise in value. While your initial $10,000 will certainly lose some value, you’re minimizing the amount of money you expose to depreciation. Meanwhile, most of your money will be growing in value instead.

Pitfalls and Caveats

As with any investment strategy, there are a number of ways this one can go bad. Your maintenance costs, for example, will likely be higher with the older car. And if you buy a true lemon, the headache may be a bigger problem than it is worth.

Another factor to consider is your investment return. Although the stock market has returned about 10% per year on average over the long run, it’s entirely possible that markets aren’t as kind over the five-year period you’re invested. Potentially, you could even lose money.

The Bottom Line

Although there are risks involved, the “buy cheaper and used” strategy almost always ends up in a financial win. Even if maintenance costs are high, a few extra thousand dollars per year is a drop in the bucket compared with the tens of thousands of extra dollars you could end up with from your investments. And even if investment returns are poor and you earn a 0% rate of return over those five years, you’d still have socked away over $45,000 just in cash contributions. This is just one example of how buying used can actually earn you thousands of dollars. 

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