They say that your car begins to lose value the moment you drive it off the dealer's lot. Typically, a car is the second biggest investment people make after their home. So it's unfortunate that, unlike real estate, you will almost never turn a profit on a car. Unless you had the foresight to buy a 1971 Ford Cobra and keep it in pristine condition for 40 years, you can expect to lose money on your car.

Many people will use that as an argument to lease. With a lease, you don't need to worry about the car losing value because when the lease is up, the car is no longer your problem. It goes back to the dealer for them to sort out. A lease also provides a good deal of peace of mind. Typically the leased vehicle is covered by some kind of warranty, so if something goes wrong with the car, the dealer will take care of it.

On the other hand, when the lease is finished, you have nothing to show for your money. In fact, the dealer will end up turning around and selling that car. It is certainly a win-win for them. When buying a car, at least you have something of some value when you're ready for the next car.

The best thing to consider when buying a car is how quickly the car will lose value. Most cars lose about 50% of their value in the first three years. After that, the value declines much more steadily. If you're going to buy a car, consider buying one that is a few years old. It was hold it value better. As well, you'll avoid the possibility of buying a total lemon. A car that is a few years on it has probably proven to be pretty reliable.

When considering whether to lease or buy, consider what's more important to you: value or peace of mind. If it's peace of mind, leasing might be the route to take. If it's value, consider buying a used car that is a few years old. It's still not a decidedly bad investment, but it's one nearly every car owners makes, so that should make you feel a little better.

Learn more about this author, Sean Curtis.
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