Check out these eight top tips to beat car depreciation and help your car hold its value.
Most people know that as soon as you drive your new car off the dealer’s showroom floor, it loses a big chunk of its value straight away. It then continues to steadily lose value each year it’s on the road, and it’s not uncommon for cars to halve in value after just three years.
Depreciation is one of the biggest costs of car ownership and can even have a more significant impact on your wallet than your fuel, rego and maintenance costs. But while depreciation is an unavoidable part of owning a car, there’s still plenty you can do to limit its effect. Here are eight great tips on how to beat car depreciation.
1. Choose the right make and model
If you want your car to maintain its value as much as possible, it’s crucial to choose a popular make and model. If a dealer knows they won’t have any trouble selling your car to another buyer, they’ll be happy to offer you a better price when you trade it in.
This means you should try to select a vehicle that has good fuel economy, low running costs and a reputation for reliability. For example, brands that regularly top reliability surveys, such as Toyota, will tend to have higher resale values than others that can’t boast the same track record for quality.
It’s also worth remembering that if the model you want to buy is about to be replaced in the manufacturer’s line-up, this can drive its resale value down substantially.
2. Research resale values
Want to know how much your car will be worth in three or five years’ time? Start researching resale values through a car valuation service such as RedBook, which offers a “Future Valuation” option to help you work out how much your vehicle will be worth in one, two, three, four and five years.
Many motoring organisations around Australia, such as the NRMA, include depreciation in their car operating costs or car running costs surveys. Use this data to find the makes and models most likely to hold their value in the future.
3. Choose the right colour
Believe it or not, the colour of your new car can have a huge impact on how much its value will depreciate in the coming years. White, black, silver and grey cars are always popular and therefore better at maintaining value, while you might find it harder to find a buyer for your fluoro orange pride and joy. Keep this in mind if you’re ever toying with the idea of a bold new paint job for your vehicle.
4. Stay on top of maintenance
Used car buyers want to purchase a vehicle that has been looked after and treated right over the years, not one that has been neglected or thrashed almost to the breaking point. With this in mind, it’s a good idea to get your car serviced at the manufacturer’s recommended service intervals. Make sure you enter each service in the logbook and that you keep your receipts. This could be crucial if you want to fetch a higher price when you decide to sell your car.
The same goes for any repairs to carpark dings and scratches. Dents, scuffs and scratches can make any car look like a questionable purchase, regardless of how mechanically sound it may be, so get these patched up before you sell.
5. Keep the mileage down
The more a car is driven, the more chance there is for something to go wrong or some sort of mechanical issue to develop. By keeping your kilometres as low as possible, you can go a long way to minimising the effects of depreciation. Of course, keeping the mileage down may not always be possible in your circumstances, but it’s worth remembering that a maxed-out odometer can have a big impact on resale value.
6. Avoid non-standard modifications
Got a great idea regarding how you can improve your car, such as turbocharging the engine or taking up all your boot space with the most elaborate sound system known to man? Think twice before you make any non-standard modifications to your vehicle; while they might make the vehicle just right for you, that doesn’t mean they’ll make it an attractive purchase for prospective buyers in the future.
7. Keep it clean
Have you ever hopped into someone else’s car and been overpowered by the smell of stale cigarette smoke? Is the inside of your vehicle infused with the essence of “wet dog” after all those beach trips with Fido? If your car is home to strong and unpleasant odours, don’t expect it to fetch a high price when the time comes to sell.
From regular vacuuming to the liberal use of odour removers, keeping your car clean and fresh is essential. You will help your resale value if you avoid smoking, eating and drinking in your car as well.
Frequent trips to the car wash can also pay off, as can parking your set of wheels somewhere it’s protected from the elements. This will ensure that your vehicle looks clean and as good as new, plus it creates the impression of a well-maintained vehicle, which will help you fetch a higher price from buyers.
8. Get the best deal when you buy
When you’re shopping for a new car, chances are you’re not thinking about depreciation or how much you’ll get when you sell it in a few years, but you should be. The effect of depreciation can see your car’s value quickly drop by thousands of even tens of thousands of dollars, which can be pretty hard to swallow if you paid top dollar for your vehicle.
The best way to beat depreciation is to get the best possible deal when you buy your new car in the first place. Drive a hard bargain, haggle on the price and take advantage of drive-away deals to ensure value for money. If you save thousands on your new car, the rate of depreciation will be much easier to live with in the coming years.