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This article has been reviewed by licensed insurance industry expert, Moshe Fishman on 9/10/2024.
With soaring gas prices and increasing talk of inflation, it is more important than ever to find ways to minimize car depreciation and retain the value of your car.
While ultimately unavoidable, there are many ways to retain your vehicle's value as much as possible. This article will provide some of the best ways to minimize a car's depreciation before and after buying a car.
Choose the make and model wisely
The make and model you choose play a key role. If you want to minimize the depreciation value of your car, it is wise to opt for a make and model that are known to retain value. As a rule of thumb, the top qualities you want to look for are:
It is helpful to research previous sales prices of earlier models of the car you are interested in purchasing. Doing this will help you forecast what a car may be worth in the future. You want to make an informed decision to help you purchase a vehicle with the best chances of retaining its value.
A great place to start is the Kelley Blue Book. You can find out what a car is currently worth and what it has sold for in the past. Additionally, you can research how much similar models have sold for to get an idea of what to expect in terms of depreciation.
Standard and popular colors have a better chance of retaining value. These include colors such as white, black, gray, and silver. Conversely, choosing bold and less common colors will likely reduce the car's value.
Considering the car's manufacturer warranty can also help minimize your car's potential for depreciation.
When buying a car, the best-case scenario is to buy a make and model that offers a warranty that will transfer to the new owner when sold (known as a transferrable warranty).
The depreciation of a vehicle's value has less impact when bought used. A brand new car will decrease in value by 10-20 percent the moment it is driven off of the lot.
A used car, on the other hand, will have already undergone its most significant initial depreciation. Therefore, you can avoid a considerable loss in value by opting for a used vehicle instead of a new one. If you are currently in the market for a car, this is a significant point to consider to get the most value for your money.
Another option to minimize the depreciation of a car's value is to opt into leasing one. The price of an auto lease includes the amount of depreciation, and if the resale value is higher than the buyout price by the time your lease is up, you will likely save a significant amount of money by getting a great deal.
If you have already purchased a car and are interested in finding out how to reduce car depreciation, there are still steps you can take to retain your car's value as much as possible.
It is important to keep your car in good condition if you want to minimize its rate of depreciation. This means regularly washing and waxing the exterior, as well as cleaning and vacuuming the interior. You should also get any dents, scratches, or other damage repaired as soon as possible.
Additionally, you should keep up with all of the car's scheduled maintenance. This includes things like oil changes, tune-ups, and tire rotations. Keeping your car well-maintained will help it retain its value better than if it was not taken care of.
Driving safely will help keep your car in good condition by minimizing the risk of getting involved in an accident. Accidents can cause extensive damage to your car, which will lead to a decrease in its value.
Modifying your car can actually decrease its value. This is because modifications can make it more difficult to sell the car, as not all potential buyers will be interested in them. Additionally, some modifications may void the car's warranty.
If you do choose to modify your car, be sure to do research beforehand. This way, you can avoid making changes that will decrease its value.
One of the main factors that determines a car's value is the number of miles it has been driven. The more miles a car has, the less it is worth. This is because cars that have been driven more tend to have more wear and tear, and will likely need more repairs.
There are two critical elements to consider when you decide to sell your car: timing and the buyer.
Many car owners make the mistake of not taking into consideration when they are selling their car and how it might impact its value. The conditions and circumstances of the auto market when you plan on selling your car may affect the resale value of your vehicle.
For example, selling your gas-guzzling SUV during a hike in gas prices likely won't get you as much money as if you were to sell it when gas prices are stable.
Certain types of cars also sell better during different times of the year; it is a bad idea to sell a convertible in the winter. Consider the kind of car you are selling and research the demand.
Selling your car to an independent buyer rather than to a dealership is your best bet for receiving the most money for your vehicle. While using a dealership as a middle man is often the quickest way to get your car sold, such convenience comes at a price.
When you sell your car to a dealership, they will typically offer you less money than what the car is actually worth. This is because the dealership needs to make a profit when they resell your car.
Knowing how to reduce car depreciation can go a long way in protecting your auto investment. Whether you currently own a car, are in the market for a vehicle, or are planning on selling a car, there are specific actions you can take to secure the value of your investment.
If you already own a car and have no plans to sell it soon, car depreciation is nothing to lose sleep over. Car depreciation is unavoidable, but following the suggestions in this article can mitigate its severity and ensure that you get the most money for your vehicle if you decide to sell it in the future.
