Before I bought a new car last spring, I did my fair share of car shopping for several months. I wanted to make sure I got all the features and things I wanted in my new-to-me car without paying more than I could afford. Of course I bought a used vehicle, but there are lots of people out there that refuse to buy anything other a brand new car.
The current prices of new automobiles are at an all-time high. According to Kelley Blue Book, in March 2016 the average price of a new vehicle was $33,666. Of course, there are new vehicles to be had that cost less than this, but there are also a variety of other new automobiles selling for much more than this average.
The worst part about buying a new car is that the moment you drive a new car off the lot, the value of that vehicle drops significantly.
This is called depreciation, and it’s defined as the difference between what you paid for the car and what you could get if you sold it later. In other words, it’s the amount of money you lose from using your vehicle.
Depreciation is natural and it can’t really be stopped, but there are ways you can lessen the blow of depreciation.
Which model of car you buy plays a role in how quickly it will depreciate. For instance, the Kelley Blue Book 2016 Best Resale Value Awards show that 8 of the top 10 vehicles predicted to hold their value the best this year are classified as pickups and SUV’s. So, put a little thought into what vehicle you buy before you make a big purchase to avoid throwing away thousands of dollars in resale value later. Of course, this is not the only thing to consider when buying a vehicle. Sometimes it may be worth buying a car for other reasons, even if the typical resale value is lower.
Keep Mileage Low
It’s no secret that vehicles with lower mileage sell better. If your car or pickup has less mileage than the average of vehicles of the same age, you can expect to gain a little in resale value.
The way a car is taken care of is one of the best factors in determining its resale value. Keep yours in tip top shape by doing proper maintenance at the correct times. Consult the owner’s manual for your vehicle and rotate the tires according to the recommendations listed there. Also, change the oil on a regular basis, and check things like spark plugs and air filters to ensure good performance and resale value for your car. Make sure you keep maintenance records, otherwise all the future buyer has to consider for condition of the vehicle is your word that it’s been taken care of.
If your auto gets good gas mileage you may get a little more for it when you are ready to trade up. As gas prices go up, the resale value of vehicles with better gas mileage also goes up because people are looking for a way to offset the high price of gasoline and diesel. This is one more thing to consider before you buy a gas guzzler and find out later you’re stuck with a lower resale value due to poor gas mileage.
Keep Good Records
Again, keeping track of maintenance, whether regular or something more major, is another good way to increase your resale value and lessen the blow of depreciation. Put a small notebook in your dash and jot down mileage, date, and what was done each time you change the oil, air filters, etc. Offer to include it when you trade your vehicle in so the new owner knows the car has been maintained well. You can also save receipts or records from your auto repair shop if you have maintenance and repairs done for you instead of DIYing them.
You can’t avoid depreciation completely, but with these tips you can slow it down somewhat and give yourself a larger trade-in or resale value to put toward toward your next auto purchase.
Can you think of other ways to avoid premature depreciation on your car?