Although all cars depreciate in the short to medium term, you still have some control on how quickly it loses value. If you plan to get a brand-new car, you should know what vehicle depreciation is all about.
As a simple description, vehicle depreciation is the difference between your car’s worth when you bought it and its value if you decide to sell it. Expect the value of a vehicle to drop over time especially due to the wear and tear of daily use. Generally, the more you use your car, the faster its value will depreciate.
It’s vital to note that depreciation is one of the highest costs of owning a car, especially if you purchase a new one. In reality, most new cars lose 20% of their value once driven out of the lot.
Although unavoidable, there are several ways to minimise vehicle depreciation. There are several ways to maintain your vehicle’s value in case you decide to sell it in the future. Here are several tips to lessen vehicle depreciation:
1. Safe Driving
Accidents, especially major ones like car crashes that result in severe injuries, can result in costly repairs that can hasten your vehicle’s depreciation. Any accidents or repairs you detail to your insurance company will be part of your car’s history report. Sadly, this can lessen the value of your vehicle, making it difficult for you to sell in the future.
Depending on the type of insurance you have, such as an SR22 insurance which you can discover here, it might be a necessity under certain circumstances. A SR22 insurance is a certificate of insurance that proves you’re carrying car insurance. Hence, it states that you comply with the car insurance coverage requirements of the state you are in.
Some of the reasons that would call for an SR22 is when you were sighted for reckless driving, involved in an accident without auto insurance, driving a motor vehicle on a suspended license, or caught driving without an auto insurance policy.
2. Select A Standard Color
The color of your vehicle plays a role in how quickly it depreciates. The standard colors like white, silver, black, and gray are popular and better in maintaining value.
Remember that if you intend to sell your vehicle in the future, it might be hard to find a buyer if the color is neon orange or bright pink. Always remember this factor if you’re planning to paint your car with a bold color.
3. Research The Model And Make
Although the difference between a new and used car is often the highlight of vehicle depreciation costs, the make and model of a vehicle you’re planning to buy can have an equivalent or higher impact on its depreciation.
When buying a new model in the car market, there’s a significant variance in depreciation between the various car producers and even models by the same manufacturer. The luxury sports cars usually lose value at a slower pace than the mid-range sedans, while several German brands depreciate at nearly half the pace of their French counterparts.
4. Get A Nearly-new Or Pre-owned Vehicle
An excellent way to avoid vehicle depreciation is to look for a car that is nearly-now or that already experienced the initial drop in value. You can use the car for three to four years but if you decide to sell, do it at the six and seven-year mark. With this approach, the vehicle is still relatively new once you acquire it, but if you make sure that it stays in good condition, it will remain attractive to potential buyers once you decide to sell.
When you purchase a pre-owned vehicle that is still in good condition, you can minimize the costs. In most cases, a certified pre-owned vehicle often includes a warranty coverage that significantly reduces the concern that comes with buying a used car.
5. Regular Maintenance
Your vehicle should receive timely service at the manufacturer’s recommended service intervals, and make sure that you’ll keep the receipts. When you have a complete compilation of previous maintenance, it’ll reduce its depreciation.
If you have a well-maintained car, it’ll always have a higher value than one that’s under neglect. Always remember that wear and tear is a significant factor that affects the value of your car.
Some of the ways to deal with excessive wear and tear include:
- Use a protective film on the door edges, hood, and front bumper
- Install fitted floor mats to prevent carpet stains and allows easy clean-up of spills while also reducing shoe marks
- Invest in protection such as rustproofing, undercoating, and paint guard to ensure that your vehicle stays in good shape
Making sure that your car is spotless and fresh is vital in minimizing its depreciation. Additionally, it might be best to avoid eating, smoking, and drinking in your vehicle.
In case you lack time to clean your car, a trip to the car wash is also a good idea. Also, make sure that you park in a garage or covered space.
6. Keep The Mileage Down
Once you start driving with your car, the higher the chances that an issue will arise. One way to lessen the depreciation of your vehicle is to keep the mileage as low as possible. A maxed-out odometer will have a significant impact on the resale value.
7. Avoid Non-standard Modifications
If you plan to add upgrades to the engine or install an elaborate sound system in the trunk, you should think twice. These upgrades will reduce your vehicle’s value and make it less attractive to potential buyers.
Try to keep non-standard modifications or upgrades to a minimum to ensure that your car won’t depreciate due to your personal choices.
With the help of these tips such as observing safe driving habits at all times, choosing a standard color, researching about the model you want, getting a nearly-new or pre-owned car, and providing regular maintenance, your car will retain most of its value while staying in optimum condition for years to come.
Danis Woods in Businessman, investment banker and stock exchange traders. On the same time he loves writing financial blogs to shed lights on different aspects that new and existing businessman are not aware of.