Savvy shoppers know that vehicle depreciation is a significant factor when they select a car. While new vehicles are seductive, it pays to take the time to look at the long-term value of your next vehicle.
More Bang for Your Buck
Today, Ben Franklin would agree that death and taxes and vehicle depreciation are primary constants in life. While it’s fun to admire new models, but you may think twice about purchasing one after you factor in vehicle depreciation. Trendy, shiny and new can be breathtaking, but your best value may always be in the pre-owned.
What is Deprecation?
In its purest form, depreciation calculates the age and wear on a car to determine its current value. When you buy a new, flashy car, your model will decrease by 10% within the first month of ownership. And by the end of the first year, you lost an additional 10%. And you’ve only started making payments! Ouch! Within in five years, the value of your car may be reduced down to 40% from the original cost.
How Do You Figure?
Like everything else, cars age with time. But unlike an oil painting, the ravages of time will decrease the value of a vehicle. So, how do people calculate car depreciation? Once upon a time, people didn’t look much further than Blue Book value, but technology has changed all that.
More Info, More Honesty
You may be hesitant to buy a used car ‘cause you’re not sure where it’s been. But now, there’s a lot more info at your fingertips. Today, appraisers consider Year, Make, Model, and Trim, and their Standard and Optional Features. They also review the car’s history of Vehicle Condition, Number of Owners, Accident History, Type of Vehicle Use (Rental, Fleet, Personal).
When appraising, everyone starts with the mileage of a car. They see 10,000 miles per year as the sweet spot. Any more than that, and there may be further devalued. Some cars get extra points for their well-earned reputations for holding their own against aging and depreciation. These popular, luxury or collector cars are coveted and fetch higher prices. Right now, people want SUVs. Tomorrow, maybe something else.
The Times, They Are A-Changing
In an industry that rolls out multiple new products a year, changes and growth can intensify technological advancement. Anyone remember buying the most up-to-date cassette player that was replaced by CD player the following year? And now both are overshadowed by infotainment centers. As vehicles evolve at warp speed, coveted features may deprecate more rapidly.
Take Care of Your Car and It Will Take Care of You
So, what’s the final word? Gentle, loving care of your vehicle will thwart depreciation. Like your dad always said, routine maintenance is the key. Remember that, and expect a higher value at trade-in time. And if do end up selling or donating your car, there are ways to get a tax deduction for car donations.
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