Car Depreciation Explained for New Car Buyers

Your new car is a perfect machine till it’s delivered to you! The wear-and-tear begins right from the moment it is driven off… and that’s when it starts losing value. So, what is depreciation on a car? Simply put, it’s the value lost (difference) between the price paid and its current value. 

What makes the car lose its value?

In your eyes, the car is always perfect. But to understand its market value, you need to look at it objectively. Every year, a manufacturer releases new models, making older models irrelevant to new buyers. They are only relevant to used car buyers. You can avoid car depreciation to a certain extent, by limiting rough usage and ensuring proper maintenance. 

What are some factors that cause a car to depreciate?

1. Reliability: Certain manufacturers have a reputation for making cars that are reliable for a very long time.

2. Desirability: If your car is a top-rated model, it could be less prone to depreciation. 

3. Mileage: This is a primary factor in determining car depreciation.

4. Size: SUVs or MUVs depreciate faster than normal cars, as the fuel economy degrades faster in big vehicles.

5. Service history: Maintenance logs play a critical role in defining your car’s value.

   
   

How to avoid car depreciation?

Car depreciation is inevitable! You can only slow it down by taking pro-active measures. Minimize on your losses by following these car depreciation avoiding tips!

Tips to minimize car depreciation

1. Regular checks: Keep your car in optimum conditions. Don’t delay any service or repairs.

2. Stay away from mods: Avoid any fancy modifications! This only makes it less desirable by average buyers.

3. Use popular colors: Avoid bizarre color shades as they might put off most buyers.

4. Selling at the right time: Try selling it off before the new model hits the headlines.

5. Gap Insurance: With this, your insurer will pay you a certain amount of  depreciation,  depending on your coverage.

If you’re looking for an expert agency that will find you the right Gap Insurance for the lowest market rates, you can check out The Mike Leonard Insurance Agency.