How To Beat Depreciation
We have all heard how the value of a brand new car drops by thousands of dollars as soon as it’s driven off the showroom floor. It is an unfortunate fact that the value of all vehicles will depreciate as the years go by, unless you have been lucky enough to purchase a car that becomes a collector’s item. Different makes and models depreciate at varying rates as well. It can have a significant impact on the total cost of owning a vehicle over its lifetime, making depreciation something that you need to factor in when buying a new vehicle. Just like when shopping around for car insurance, you should do some research before handing over your hard-earned dollars on a car that will disappoint when it comes to selling it down the track. Here are some tips on how to beat depreciation, or at least minimise its effect on your vehicle.
Buy second-hand
A model that is only one or two years old should cost thousands less than the original price but will come with the benefits of having travelled low kilometres and still be covered by a manufacturer’s warranty. Look for demo models as well – these are vehicles car dealers have allocated for customers to test drive and quite often they have travelled very few kilometres.
Look for sales and specials
Buying a vehicle that is “drive away, no more to pay” can save you plenty of cash. It means the dealer pays the on-road costs such as registration, stamp duty and delivery fees. End-of-year runouts and superseded models are quite often good buys as well.
Do some research
Studies have shown that cars lose on average around 14% of their value in their first year and a similar amount in their second and third years. After that it can be up to 8% per year. So when considering which car to buy, it pays to do a comparison of their depreciation value. There are plenty of websites around that offer advice and figures.
Optimise the resale value
When it comes to selling your car, it’s obvious that you want the best price. So it makes sense that the vehicle is in the best condition possible. So consider these points:
- Servicing your car regularly and having the log book filled in each time is a key to realising a better price;
- Look after your car – keep it in a garage, wash it regularly and fix up any minor dents or paint scrapes sooner rather than later;
- Fix up any niggly little problems, such as rattles or broken lights. They give buyers an excuse to talk to the price down;
- Be wary of modifications – if you have lashed out and installed the latest and greatest stereo with the help of cash loans or even paid for it with folding money, the chances are you won’t get what it cost you back when you sell the car. The same goes for exterior modifications such as spoilers and alloy wheels;
- Consider selling your car privately, where it is likely to get a higher price than trading it in at a dealer.
Author Bio: Tom Mallet is an Australian freelance writer and journalist. He writes extensively in Australia, Canada, Europe, and the US. He’s published more than 500 articles about various topics, including car insurance and cash loans.