Car Depreciation – What is it?
Car depreciation is the decrease in value of your car over time. Depreciation affects cars as well as other types of vehicles.
Although the rate of depreciation can vary, it is widely accepted that your car could drop by 60% in value after 3 years.
Why does car depreciation happen?
There are a number of factors that will cause your car to depreciate in value. It starts as soon as you drive it off the forecourt with a mixture of inevitable as well as mitigating factors:
The average mileage is about 10,000 miles per year. The more mileage you rack up on your car, the less your car will be worth.
2. Running Costs
With political influences in countries where oil is sourced from as well as industry in developing countries driving up costs, running costs for fuel and oil will influence the value your car will hold.
Depreciation affects large petrol run family cars more so than small cars aimed at city driving, so this is something to consider when you are selling your car on. Servicing and parts will cost more for big cars from luxury brands will cost more than smaller more budget friendly cars too.
New models will come out all the time and if your car is followed by many newer models then there will be less demand for it and the value will decrease as a direct result.
There will no doubt be minor wear and tear from selling a used car such as small dents or worn out seat covers. However, looking after any repairs whether aesthetic or mechanical as well as keeping it clean will help to minimise the impact of car depreciation.
Keeping a full service history as well as regular servicing of your car will help to fight the effects of car depreciation. Don’t worry if there is a few missing from the history as even a part complete service history will still help your car hold more value.
Don’t be put off the cost of servicing either as this is value you can get back when you sell your car on.
6. Number of owners
The fewer owners your car has had in the past, the better. You will have a record of previous owners on your log book.
Fewer owners mean the car is either a nearly new model from the manufacturer or the car has been owned for a long time by each owner, which implies reliability that will help your car hold more value when selling on.
What can minimise car depreciation?
1. Keep car in good condition
2. Be economical with mileage
3. Regular servicing according to manufacturer’s schedule
4. Sort out any repairs needed as soon as possible
5. Sell it for the best price
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