Hidden Car Ownership Costs: 5 Frequently Asked Questions About Car Depreciation
When you purchase a new car, it can lose approximately 10 percent of the original value within the first month of ownership. Cars will continue to depreciate at a rate of about 10 percent per year. This means that your car could lose about 50 percent of the original value within five years. Depreciation rates of cars should be something you are aware of when deciding to buy a car. Understanding some of the basics can help you spend your money in the most efficient way possible.
What is Depreciation?
As newer and better technologies are developed, older models of certain items become less valuable. This is the case with most cars because car companies are always working on the next model. The next model will have some sort of new feature or technology that will make the car better. While many cars will operate similarly, this model of continuous improvement is what leads to the depreciation of cars.
As a car owner, you always have the decision in front of you to continue to own a car that is losing value or sell that car to upgrade to something newer. There are advantages to keeping cars once they are paid off, but there can also be advantages to selling and upgrading. When looking to sell your car, it is advantageous to work with a company that specializes in selling high-end cars rather than going it alone. A company like We Buy Exotics is a good example of a business that can help you get top dollar for your car. Visit their website at WeBuyExotics.com to learn more about their services.
What Else Affects the Value of My Car?
Luxury cars tend to hold their value better over time. This happens because luxury car companies have built positive reputations among customers. Luxury cars are also more sought after due to the prestige that comes with owning one. How in demand a car is can also affect the value down the road. If SUVs are more in demand at the time, they will hold their value better. Cars that are fully loaded with features will also hold their value better because those features are more in demand by buyers. You might also be wondering, “Where can I find out how much my car has depreciated?” This is a great question that is worth exploring. Many car depreciation calculators can be found online to get a solid estimate.
How do I Reduce the Depreciation of my Car?
The overall usage of your car will be a huge factor in the rate it depreciates at. If you can manage to limit your driving to 10,000 miles per year or less, your car will depreciate more slowly. Cars need routine maintenance and long term maintenance. Keeping up with changing the oil, rotating the tires, replacing the brakes, and other maintenance items will help the car retain more value over time. Another factor to consider is the safety features that your car comes with. Cars with better safety features tend to hold their value better over five years.
A question that might be running through your head is, “isn’t there some way to avoid car depreciation altogether?” There really isn’t a way to avoid depreciation, but you can consider buying a used car that has low miles and is in good shape overall. Cars come with maintenance records now, so finding a car that has been properly maintained is a way to limit depreciation. Buying a car that is “like new” could be the route to take.