As opposed to homes, cars are not considered to be a strong asset. They rapidly depreciate, starting as soon as you drive out of the car lot. They are worth less every mile you drive them and every day you own them. They also have high expenses associated with them, including fuel, insurance, maintenance, and repairs.

Nevertheless, cars are still a necessity for most people (with the exception of inhabitants of large cities). So we need to try to maximize the value and minimize the expenses associated with our cars.

Here are some general tips when investing in a car:

Consider buying rather than leasing a car.
- Although rapidly-depreciating, cars that you own are still considered a part of your assets, whereas leased cars are not considered to be an asset
Used might be better than new.
- A car's value rapidly depreciates (non-linearly) in the first 3-5 years, finally reaching linear depreciation after five years.
- In buying a used or slightly used car (especially if >3-5 years old), you can save thousands of dollars when purchasing, and you will also be purchasing a car that will not depreciate as rapidly as a brand new car.
If possible, pay CASH for the car.
- As a medical student or new resident, this is not usually achievable. However, as soon as you have the solid assets to be able to do so, consider paying cash for a car.
- Paying cash forces you to think about what you are actually able to afford in concrete terms.
Financing a car: consider a 3-year financing plan (paid out of the 80% of income designated to personal expenses)
- Provides the best interest rate
- Provides good equity on the car
- It forces you to think about if the car is really affordable for you

Video and information from "Wealth Management for Doctors" by US Acute Care Solutions.