Car Depreciation: What To Know About And Tips To Minimize It

Car Depreciation is a real important concept to understand when we decide to buy a car. In fact, when we purchase a new car, its depreciation is often the last thing in our minds. We only care about it when we are about to sell the vehicle. Car depreciation is something we all should be aware of. It is the difference between the value of a car when one purchases it and when one wants to sell it. The fall in the value varies among the designing and the models of the cars, but is mostly 10-30% during the first year of the purchase and then is about 50% after three years or more of purchase. Car depreciation is also referred to as car valuation in which you have to decide the correct value for your car. Each and every car depreciates as it gets older.

Factors that affect car depreciation:

The depreciation of a car is affected by numerous reasons like the design and the model, and many more things. Let’s have a look at the factors that affect the depreciation of the car:

  • State of the vehicle

The first point and one of the major factors upon which the depreciation depends is the condition of the vehicle. The poor the condition is, the more the value of the vehicle will be reduced. Dents on the body, exterior, and interior of the car will reduce the price of the car. Inspecting the condition of the car before purchasing or selling it is an important thing to do.

  • Record of Servicing

You must keep this factor in mind that the car that you are about to purchase or sell should be perfectly serviced. The service booklet of the car should have stamps and bills displaying the servicing in line.

  • Size

The size of the vehicle is another factor that affects its depreciation. The bigger the size of the car is, the luxurious the car is, the more will be its cost of maintenance and will need regular service which means that it will depreciate more than smaller cars.

  • Designing and model

The designing of a car and its model also play a huge role in depreciation. Some of the brands make more dependable vehicles. If a particular vehicle is known for its designing and its durability, then its value will be much better than the ones that are known for breaking down easily.

  • Warranty

Checking the warranty of the car is another integral factor. No matter you are buying or selling a vehicle, considering the warranty period can be very helpful. The more the warranty period is, the lesser it will depreciate.

  • Road Tax

The amount payable to road tax needs to kept in mind too. The cars that take up too much fuel costs more tax every year, which is not liked by the people who purchase cars.

  • Mileage

The mileage of the vehicle should be average, as the cars with higher mileage is not much considered by the buyers.

Tips for minimizing depreciation:

  • Purchase car that holds on to their value

One of the best ways to minimize the depreciation of a vehicle is to purchase in a brilliant manner. It means that one should go for the car in the first place, which has the capacity to hold their value for a longer period of time, in this way it will help you while you are selling the car later.

Also Read: Financial Freedom: Stop Living Paycheck To Paycheck

  • Maintenance

Maintenance is another major point that should be examined by you if you want to minimize depreciation. You will get a better value if you keep your vehicle in a good shape and condition in the exterior and interior both.  Following the maintenance schedule and keeping the history of maintenance will also be very profitable for you.

  • Purchase a used car

If you purchase a new car, it will depreciate faster, as the depreciation rate for most of the cars is fastest in the first three years, which states that the vehicle may have lost more than 45% of its value during that time period.  And, if you purchase a used vehicle, it will already have lost some of its value, and you can enjoy the advantages of the reduced value. Purchasing a used car will make the car-buying very affordable for you.

  • Control mileage

Excessive traveling can cause more damage to your vehicle. More damages to the body of your vehicle will lead to more depreciation. So, to control the mileage of your vehicle, you need to consider taking public transport, walking, share a carpool, or other things, until and unless it is very necessary to use your own car. This will help in controlling the excessive traveling of the car. It will make it look like for a longer duration of time which will assist in minimizing the rate of depreciation of the car.

  • Leasing

Now, instead of purchasing or owning a car, you can consider leasing your car. You will not own the car, but you will rent a car. This will be for a certain number of miles and a certain duration of time. The only thing you need to keep in mind is before signing in the documents, you need to go through the terms and conditions and then decide if you should lease or purchase a car.

Bottom line

There are a lot of factors that one should consider while purchasing a vehicle, but depreciation, that nobody of us considers should be immediately added to the list, as it comes of most importance when your car gets old. Nobody of us would want to invest in a car, that would hold no value, after a certain time of usage, so while buying a car, you must constantly have it in your mind, that you need to purchase a car that will let you experience all kinds of advantages even after a longer period of its usage. You will get all the benefits of a car, only if you consider depreciation and follow all the tips that need to be followed for reducing the depreciation rate.


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