What is car depreciation?
You will hear a lot about car depreciation when you come around to selling your car as people haggle you down on price. Car depreciation does exist and it is the decrease in value of your car over time and impacts all cars. Although the rate of depreciation can vary, it is widely accepted that your car could drop by 60% in value over three years.
Why does car depreciation happen?
There are a number of factors that will cause your car to depreciate in value. It starts as soon as you drive it off the forecourt with a mixture of inevitable, as well as mitigating, factors:
- Mileage – The more mileage you rack up on your car, the less your car will be worth. Even if your car is old any mileage it has done under the average 10,000 miles per annum will help reduce the money you lose on it
- Running costs – Depreciation affects large petrol run family cars more so than small cars aimed at city driving, so this is something to consider when you are selling your car on. Servicing and parts will cost more for luxury brands than for smaller more budget friendly cars
- Demand – New models will come out all the time and if your car is followed by many newer models then there will be less demand for it and the value will decrease as a direct result as desirability is key
- Condition – There will no doubt be minor wear and tear when selling a used car such as small dents or worn out seat covers. However, looking after any repairs whether aesthetic or mechanical, as well as keeping it clean will help to minimise the impact of car depreciation
- Servicing – Keeping a full service history, as well as regular servicing of your car, will help to fight car depreciation. Don’t worry if there is a few documents missing from the history as even a part partial service history will still help your car hold more value
- Number of owners – The fewer owners your car has had in the past, the better. You will have a record of previous owners on your log book. Fewer owners mean the car is either a nearly new model from the manufacturer or the car has been owned for a long time by each owner, which implies reliability that will help your car hold more value when selling on
What can minimise car depreciation?
Trying to put a limit on your car depreciation may seem like a tough task but there are ways you can attempt to keep it down, including:
- Maintaining your car in a good condition will always help, so avoiding any nicks and damage as well as keeping the interior in a good way
- Try not to put excess mileage car unnecessarily as a low mileage count will always keep your car’s value higher, no matter how old it gets while you own it
- Make sure you are regularly servicing according to manufacturer’s schedule as this is something that buyers will pick up on if not
- Sort out any repairs needed as soon as possible as you will only be asked to do them at point of sale
- Know the market and try to get the best possible sale price you can when choosing to offload your old car
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