How fast does a car depreciate?
The (Not So) Sad Tale of Vehicle Depreciation
Some things, like fine wine or the value of a property, get better with age. Others, like a bowl of fresh fruit or a pop song, seem to get stale overnight. The value of your car, unfortunately, falls into the latter category. After all, we've all heard the old adage stating that the minute you drive your new car off the lot it's worth less than what you just paid for it, but vehicle depreciation need not be the financial millstone you envision it to be. With a little foresight and prodigious planning, you can maximize the value of your used car by paying attention to the trends and factors leading to vehicle depreciation, as well as the techniques you can use to forestall it.
The (General) Schedule of Vehicle Depreciation
Any discussion of vehicle depreciation will obviously need a definition. Put simply, vehicle depreciation is the difference in price between the time you bought the car to the time you sell it or bring it to the dealership for a trade-in. Obviously, the vehicle depreciation rate is dependent on a multitude of factors, (including make, mileage, and condition) but generally speaking, the average automobile's value will depreciate by 60% within the first three years.
As a matter of fact, most cars depreciate in value by up to 40% in their first year alone, so getting your money's worth on the sale of a used car should happen after the 3rd year mark, provided the car is in good condition. If you're looking to buy a used car, you should know its history- including its age, mileage, and condition- to see if its sticker price is congruent with its projected vehicle depreciation rate. After all, as a seller, you want to maximize your asking price and as a buyer, the only ride you want to be taken for is in the car, and not on its asking price!
Factors that Affect Vehicle Depreciation
There are a multitude of factors that contribute to vehicle depreciation, not just age and the passage of time. The most pressing are:
Mileage: A car averages about 10 000 miles per year. If it averages more than that, the vehicle's depreciation will increase exponentially. This stands to reason as buyers see cars with higher mileage as more prone to problems and breakdowns.
Make & Model: If your car proves not only popular with consumers, but is consistently updated with new lines by the manufacturer, its depreciation rate will lessen. This makes sense in that the car is not only sought by the general public (both intact and for parts) but is well supported by the manufacturer.
Even your color's color could affect its depreciation rate: more common colors (black, white, silver, red) tend to trend better as they are more desired by the general consumer, as opposed to less common colors like lime green, yellow, or light purple.
General Condition: If you've taken good care of your vehicle, performing regular service checks and addressing issues immediately as they arise, your vehicle depreciation rate should lessen. However, if your car's interior/exterior is damaged, or if you have a history of accidents, repairs, or modifications, expect your car's value to drop significantly.
The Bottom Line
At the end of the day, getting the most value out of or for a used car is a matter of taking good care of it, and knowing when to buy and when to sell, This, of course, will be based on a multitude of factors, not the least of which is mileage, make and model, and general overall condition.
For more tips on vehicle depreciation or to answer any of your questions, contact Auto-Scrap today!