‘I'll Keep My 4Runner:' Expert Says Millionaires Don't Buy Cars. Here's Why—And What They Do Instead

Motor 1

2 days ago

A property investment enthusiast claims that millionaires exclusively lease cars because they're depreciating assets.
Abi Hookway (
@abihookwayproperty
) claims that if you're buying a car, you're missing out on building wealth via assets.
She breaks down her logic in a viral TikTok that's accrued over 6.8 million views. The clip begins with her standing in front of a parking lot with myriad vehicles before launching into a monologue urging folks to always lease their rides.
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'Rich people do not buy cars. This is my staff car park. And I guarantee 90% of the cars in this car park are owned,' she says at the top of her clip.
Hookway continues, 'They've been bought with money or loans and they're owned. Millionaires don't do that. Millionaires lease cars. So what millionaires do is they go and they buy assets. Assets that give them passive income.'
Lease Cars With Your Investment Capital
According to her, appreciating assets will offset the cost of a new car lease.
'And with the passive income they use it to lease a brand new nice car,' she says.
'Why are they leasing instead of buying? Because a car is a depreciating asset—it goes down in value. So why would they invest in something going down in value?'
Following this, she explains what the uber-wealthy do for their transportation needs.
'What they do instead is they invest in things going up in value that give them a passive income and lease the car,' Hookway says.
'Say it with me: We lease liabilities, we buy assets.'
'Now rich people won't tell you this stuff because they keep it hidden. But I will,' she says at the end of her video.
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Other financial analysts do seem to echo some of the points made in Hookway's social media post.
CNBC
reports that self-made millionaire David Bach
said that
purchasing a brand new vehicle 'is the single worst financial decision millennials will ever make.'
This same logic is echoed by
GoBankingRates
in a separate article from 2024. The piece touches on the same fundamental downside of car purchasing: depreciation.
However, the level of depreciation depends somewhat on how new the car is.
For instance, if you buy a car right when it comes out, it can lose
as much as 20%
of its value within the first 12 months of purchase.
And depending on the make and model of the vehicle one buys,
depreciation rates
can hit as high as 60% after just five years.
Bach recommends that those shopping for a new car should consider looking for used models between 3-5 years old.
Often, these models will still have some of their original manufacturer's warranty. It's also true that recalls may have already been issued for a vehicle that's been around for a few years.
More importantly, however, is that in buying a lightly used car, drivers can bypass eating the cost of its heftiest depreciation years.
Lease or Buy?
Some financial experts swear by the '
one-percent rule
' when it comes to leasing a vehicle.
Basically, this car leasing strategy works as follows: Take the monthly payment then divide it by the total cost of the vehicle, including applicable taxes. If the monthly lease payment is equal to or close to 1% or less of the total cost, it's considered a great lease deal.
But there are other factors to consider with leasing a vehicle. First: Mileage. Many leases come with a standard 12,000-mile per year limit, with more miles incurring greater costs. Road warriors may need additional breathing room on their odometers, so this option could end up costing them more money down the road.
Moreover, if one purchases a lightly used car from a manufacturer renowned for its reliability, then that could ultimately be a more cost-effective solution.
However, others may want to consistently have the newest vehicles with the latest features, so they may prefer a lease.
Motor1
has reached out to Hookway via email for further comment. We'll update this if she responds.
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