You may have heard that the moment you take a car off the lot; it depreciates. While this is true, there are various factors that contribute to the depreciation and overall worth of your car. Why should you keep track of your car’s worth? Keeping track of the true value of your car can help you make wise decisions regarding how much equity you have and when it is time to trade for a new one. Increase your equity and the car’s true value by performing regular maintenance and keeping the car in the best condition you can.
Age of the Car
A car can lose at least 20% of its original value within the first year of ownership. The good news is that every year after that, it levels out. The exact rate of your car’s depreciation depends on multiple factors. Because car companies release new models of their cars every year, older versions are regarded as less valuable. The natural wear the car experiences also shows the age of the car. Buyers are more likely to pay more for a new car than an old one (unless you have an antique that has been kept in pristine condition). This can and will affect the value of your vehicle.
The miles you have driven in your car makes a big impact on potential sale price. The average person drives 12,000 to 15,000 miles a year. The higher the mileage, the more likely mechanical problems will occur. It is a natural part of owning and using a car. However, if you have 100,000+ miles on your car, buyers will be concerned with what they can get out of the car before it dies on them. This means you have about six years of great use before resale value depreciates even more. You can save mileage with everyday decisions to limit your trips around town, or by choosing to rent a car when planning a big road trip.
Appearance of the Car
Obviously when purchasing a new or used car, you want the car to look and feel nice. Appearance has a huge impact on your car’s value. Rust damage and a dirty engine will lose value on the car. A dent or scrape can also turn potential buyers away. Bumper stickers and enhancements will also bring down the value of a car. Paint protection helps your car stay in better shape, which can help you keep the aesthetic value higher. Investing in subtle auto body work will increase the overall aesthetic and value of your car in the long run.
The interior condition of your car will also have a big impact on the resale value. If you have smoked, eaten, spilled things, or done anything that would tarnish the inside of the car, the value will go down. When someone purchases a used car, they don’t want to be reminded of the previous owners. Unfamiliar and unpleasant smells are a direct turn off. If your upholstery has holes or parts are either missing or broken, the value will also go down. Generally, leather seats that are cleaned and conditioned regularly hold their value and hide their age very well.
Current Fuel Prices
Believe it or not, current fuel prices affect used car values. If gas prices are high, individuals are more likely to want an electric or hybrid car. If gas is cheap and diesel is high, then there will likely be individuals looking to make a trade. Investing in a car that gets great mileage, tends to have more resale value and leeway when it comes to fluctuating gas prices. Unfortunately, if you are eager to sell, you will just have to deal with whatever the current fuel prices are. It is also important to note that as electric cars become more integrated and charging stations more popular, their resale value is increasing. Investing in an electric or hybrid car may not be a bad option if looking to capitalize on your investment in a few years.
When selling a car, the buyer wants to make sure that it will be worth their investment. They don’t want to put more money into it than it is worth. Your car’s value relies greatly on its mechanical condition. If the check engine light is on, there are issues with the engine, transmission, or suspension, the cost it would take to repair comes out of the overall value. Bald tires, worn brake pads, and bad headlights also take away from its value. Often, the cost to get simple mechanical repairs done is cheaper than what you would lose on the resale. Investing in a few mechanical fixes prior to listing will give the buyer confidence in what they are purchasing and you have more money in your pocket.
Where you live has a big impact on the resale value of your car. For example, a tropical climate does not have a high demand for four-wheel drive vehicles that are good in snow. A real-wheel drive convertible is much more common in that type of climate. Depending on the popularity and resources available, electric vehicles can either be seen as a commodity or a hindrance. The size of the vehicle will also play a factor when you look at the family unit size within your area. Sometimes you need to list your car in various places to find the right buyer.
The attachment you have to your car may increase the value it has in your mind. Unfortunately, new owners don’t care about the ballads you shouted at the top of your lungs, or the road trips you’ve taken in this car. You’ve been through a lot with your car, but that doesn’t mean the new owner will pay the extra price tag to compensate for your memories. Keep your car clean, perform regular maintenance, and take care of problems the moment they come up to keep your car happy and the value high.
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