Any large asset has a certain value as you purchase it and depreciates at a specific rate afterward, including computers and other high end electronics. Although vehicles seem like a good investment, similar to real estate, they do not gain value over time. Vehicle depreciation rates are considerably large, especially in the first five years of ownership. Your car may lose value relatively fast, but you can combat that number with proper care.
Off The Lot
The moment you drive off the dealer’s lot in your brand new car, the value drops 11 percent from your retail price. You are putting immediate wear onto the engine and tires, creating value loss.
Each Year Afterward
Each year until the car is five years old, it loses between 15 and 25 percent of its value. If you are looking to trade the car in for a new model, you should consider the trade within this time period for the best deal.
The End Result
Once the five year period is over, your vehicle does not have much value and may be as low as 37 percent of the purchase price. Fight this depreciation with a smart vehicle purchase in the beginning. Select a classic color, such as white or silver, for a higher resale value. Choose a brand that has a proven track record with low maintenance and little repair issues.
Improving Your Value
The moment you purchase the car, keep it covered in a garage or carport to retain a strong paint job. Clean the interior meticulously to keep it free from carpet and seat stains. Value depreciates considerably with a dirty interior. Update your GPS software and add other modern features, including satellite radio, to keep your resale value as high as possible.
It is critical to maintain the vehicle and keep the service records on hand. When you sell the car, you have proof of care which gives the buyer an idea of the engine’s wear. Tire replacement, alignment and other car maintenance records also tells a story of quality and care as well.
Although depreciation is a fact with any car, you can impede monetary loss with care and clever feature choices during purchase. Keep your car beautiful inside and outside for the best value over the years.
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