Every car buyer should know the harsh truth about depreciation. The moment you drive your new car home from the dealership, the car has already decreased in value.
After five years, it will have gone down to 50% from its initial value, and after ten years or beyond, you can assume it’s fully depreciated.
Given these problematic facts, is there anything you can do to beat car depreciation?
Luckily, there is. Check out these simple tips to slow down the rate at which your car’s value depreciates.
Consider Buying a Used Car
A tried and tested way of beating car depreciation is buying a used car instead of a new one.
Essentially, a used car has already had its initial drop in value. Buying one saves you money upfront and lets you enjoy significantly reduced ownership costs.
Vehicles have varying depreciation rates, depending on the make and model. On average, a car loses its value by 15% after one year. However, the following year, it will lose much less. The year after that is even less painful and will typically fall at a 5% rate. This means that you won’t have to suffer from a huge depreciation if you buy a second-hand car.
Ideally, you want to buy a second-hand vehicle that has only been used for a year or a used model from the current year model. Such a car would still be in great condition, and the 50% depreciation won’t hit you.
Make and Model Matters
Since not all cars are created equal, it also follows that they won’t depreciate at the same rate. Another effective way to overcome costly depreciation is to buy smart.
Invest in car models that hold their value. There are different names each year, so make sure to keep updated by checking out credible resource’s online or asking your local dealership.
Generally, sports cars are more likely to hold their value than other vehicles, but some other models also depreciate slowly.
This 2022, some of the cars that are worth considering, in terms of their depreciation rate, are:
- Jeep Wrangler
- Porsche 911
- Toyota Tundra
- Toyota 4Runner
- Subaru WRX
- Dodge Challenger
- GMC Canyon
- Nissan Frontier
- Toyota Tacoma
Another thing to consider is the color of the car. While unique hues like pink or yellow can feel friendly or unique, it’s smarter to choose traditional colors like silver, red, black, grey, and blue if you’re concerned about depreciation.
Add Protection and Accessories
Since wear and tear is a major factor that affects the resale value of a car, it certainly pays to perform some upgrades that will help keep your vehicle running smoothly.
Undercoating, paint protection, and rustproofing will keep your car in pristine condition for longer. Additionally, consider wrapping your hood, bumper, and door edges in 3M protective film.
A new set of custom rims will make your car more attractive to potential buyers, which could mean a higher resale value.
You can equip your car with factory suspension so that it can accommodate a wide range of driving conditions or with an intercooler that protects your engine. Other helpful upgrades are a braking system, throttle response, and bracing.
Upgrading the interior of your car is a good trick as well. Upgrading the carpets, fitting new seats, replacing the dashboard and steering wheel, and updating some of the driver controls are simple things you can do to give your car a makeover and increase its value.
Keep Your Vehicle in Top Shape
Several factors affect car depreciation. They include your vehicle’s condition. If your car has experienced normal wear and tear, its depreciation will be much lesser than if it incurred substantial damage such as big interior dents or stains or been in an accident.
That said, taking care of your car is of the utmost importance. Make sure you keep up with the scheduled maintenance for your car.
Maintenance should include oil changes, tire rotations and replacements, and tune-ups. Keep a record of your car’s maintenance. You’ll need them when you decide to sell your vehicle.
Mileage is another major factor that influences the depreciation value of a car. Age-related depreciation assumes that a vehicle has an average yearly mileage of 10,000 to 12,000.
A higher mileage indicates more wear and tear, which means your car would most likely incur a significant drop in value. Even so, mileage is an imperfect predictor of quality. Essentially, you need to drive your vehicle over long distances for it to stay in good shape. Driving is also good for your engine. A car that’s mostly resting will quickly deteriorate.
However, while it’s normal for a 5-year-old car to have about 50,000 miles on the odometer, you could expect a vehicle that’s just two or three years old with the same mileage to be in a worse condition.
When shopping for a used car, you will want to consider its age, mileage, and past record of accidents and maintenance to have a better view of its depreciation. You can get a free vehicle history report online to check on these factors.
Sell It Yourself (at the Right Time)
At the end of the day, depreciation is a simple math problem. You simply subtract the resale price from its original price, and you know your number. It goes without saying that the more you get for your car when you sell it, the less you lose in depreciation. It’s best to sell the vehicle yourself. Generally, you get more through a private sale than a trade-in.
What age is the best time to sell a car? Most people offload their car at three or five years. You don’t want to wait too long before you sell it, or its value will have significantly dropped. As the car gets older, the rate at which it loses value slows down, to the point that it’s pretty much worthless by the time it reaches 10 or 12 years old.
Car depreciation is inevitable, but there are ways to slow it down. Buying a used car is one of the best ways to beat depreciation.
However, if you prefer a brand new vehicle, consider the models that hold their value. It’s also essential to keep your car in good shape and perform regular maintenance. A few upgrades can boost its performance and resale value too.
About The Author:
Nathan Barnes became a car enthusiast at the age of four when his father taught him the difference between Chevy and Ford. In 2012 Nathan put his knowledge in practice and started reporting on cars, races, and the auto industry on different social media platforms. Currently, he’s a happy owner of a 1967 Alfa Romeo and a Lancer GSR.