Depreciation can be defined as “a reduction in the value of an asset over time”. There are numerous factors that contribute to depreciation, including mileage, usage, the economy, and wear and tear. Therefore, it’s expected that as any car ages its value is likely to decrease.
The rate of depreciation is highest in the first year of ownership and continues gradually over the next three to five years. Depreciation is important to vehicle owners because it has a direct impact on the resale value of your car, but there are several ways to lessen the effect of depreciation.
The first step is to research different car models, because not all cars depreciate at the same rate. Certain manufacturers have good track records, so their cars hold better value over time meaning better trade-in prices for the owner.
Colours such as white, black and silver are very popular and tend to be even in more demand in pre-owned cars. It is also important to take care of the vehicle itself with maintenance and regular/annual services. Low mileage is also another key factor in determining depreciation, however, cars with great fuel economy will always be more in demand.
When it comes to selling your car, you will have to decide to sell it privately or trade it in with a dealership. Usually trade-ins have a lower resale value as the dealership still has to make a profit with their own mark-up, but this process is typically more convenient.
Depending on the exact model most private sales will offer a better price for the seller if you are willing to do a certain amount of the groundwork yourself. The bottom line is that car depreciation is unavoidable, but you can minimise its effects and ultimately have a positive impact on the value of your vehicle.
By Wanita Wallace