Is Your Car Losing Value By The Day? How to Minimise Car Devaluation
As with most items, when it comes time to resell your vehicle, you can expect to notice a difference between the price you receive for the car and the price you initially paid for it.
If you are looking to sell your car in the near future, you may wish to learn more about car value depreciation. This can help you get a good idea of how much your car may have devalued by and give you a rough estimate on how much to expect to receive for the vehicle at resale.
What is Car Depreciation and How Does it Work?
Simply put, car depreciation is the difference in price between the amount you paid for the car when you bought it and the price you can expect to receive for the car when you sell it.
The decrease in market value tends to vary between manufacturers and models. However, a useful rule of thumb to use is that cars can decrease in value between 15%-35% in the first year or up to 50% over a three year period.
As you can see, the value of cars can depreciate quickly, some models more than others.
What Affects a Car’s Value?
While there are many factors that affect the overall resale value of your vehicle, there are some things that crop up more commonly than others. Some of the more common reasons for depreciation in value are:
The more miles your vehicle has clocked up over the years, the less it will be worth. On average a vehicle would travel around 10,000 miles in a year, so if the average number of miles your vehicle has travelled in a year comes to less than this, your vehicle’s value will be worth more than average. Conversely, if the mileage of your vehicle is above 10,000 miles per year, the vehicle’s value will be less than average.
Damage to the exterior and interior of the car will decrease the vehicle’s value. Any damage to the bodywork, upholstery or electronics can all have an effect on the price you can expect to get for the car, meaning this is also something to look over carefully when looking to buy a new car, too.
The more previous owners your car has, the more the value of your car is likely to depreciate. Be sure to check the number of owners your car has had in your logbook or V5C registration.
Size & Type of Vehicle
The size and type of the vehicle can also have an effect on the value of your car. Typically, larger and more luxurious cars can depreciate in value more than smaller vehicles, as they often cost more to run and bills for repair and maintenance are higher.
Having a full service history for your car is a great way to reassure the buyer of the car’s condition, so the more complete your service history is, the better. You should be able to find stamps or receipts for work carried out on your car in the service book.
Reputation for Reliability
Some cars have a better reputation for being reliable than others, and this can also have an effect on the value of your car. To get an idea of how your vehicle’s reliability is rated, you may benefit from checking up on the most recent car satisfaction surveys taken by established motoring publications such as Auto Express.
If your car has some of its manufacturer’s warranty left this could increase the value of the vehicle. While most manufacturers offer a standard 3-year warranty, some offer as much as 7 years, which could really help if you come to sell your car with a good portion of your warranty period left. Be sure to check on the remaining warranty period left on your car, it could be an added bonus!
Cars that guzzle fuel at a much faster rate often cost more money to tax each year, which can factor into the depreciation and resale value of the car. Simply put, cars that cost more to tax can be less desirable during resale.
If your car is the most recent model in a manufacturer’s line, it will be more desirable when it comes to resale, while older models won’t have all the newest features and design improvements of the later vehicles, making them slightly less desirable and ultimately less valuable.
Fuel economy plays an increasingly important role in the value of a car, as a higher number of miles per gallon ultimately makes a car more affordable to run. If your car isn’t very efficient with fuel, it could affect the value of your car negatively, particularly as buyers are much more conscientious about carbon emissions and fuel costs in recent years.
How to Minimise Car Depreciation
While many of the factors mentioned above are based on demand, there are some things you can do to reduce the effects of depreciation on your car. Here are a few tips to keep in mind if you a planning on reselling a car in the future:
Research Depreciation before Buying
There are several handy depreciation tools on the internet that you can use to get an idea of how different car makes and models depreciate. If you are planning on buying a car in the near future, you may want to look into how these models depreciate over time first.
Maintaining a full service history will give buyers more confidence in the condition of your vehicle when you come to sell it. You will notice that on our We Buy Any Car Valuation Tool there is a field that enquires about service history, as this allows us to give you a more accurate valuation based on the information you have about the car’s past.
Don’t Drive Unnecessarily
If you can avoid driving without it being too much of an inconvenience, do it. Keeping your mileage down will preserve some of your car’s value, especially if it shows that you have driven less than the yearly average number of miles.
Keep Your Car Looking Good
Repairing any superficial damage to your car will allow you to get more at a resale than you would have if the damage was left unrepaired. Scratches, stains and chips can all bring down the value (and desirability) of your car.
Sell at the Right Time
Selling your car before the latest model appears in showrooms will mean your model is still the newest in the range, making it more desirable and often, more valuable. Also, vehicles such as sports cars and convertibles are more desirable during the run-up to summer, while 4x4s are more appealing on the approach to winter.
Enthusiasm for the appearance of your car is great, but making ‘boy racer’ customisations will reduce the value of your car, as well as drastically narrowing the number of people who would be interested in buying it from you. Modifications such as large spoilers and tinted windows are unlikely to appeal to the vast majority of people.
So there we have an insight into car depreciation, why cars can depreciate in value and what steps you can take to retain some of your vehicle’s value. If you are looking to sell your car, use our online car valuation tool to get a free and instant valuation today!
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