Effective Strategies for Minimizing Car Depreciation

Effective Strategies for Minimizing Car Depreciation

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Whenever you invest in a car, either a brand new one off the lot or a used one from a grandmother off the internet, you have made an investment. And, as with any investment of a significant size, you’ll want to protect that investment.

Whether you find yourself behind the wheel of Peugeot vans or something smaller – a Japanese compact vehicle, perhaps – there are definitely ways to go about protecting the value of your car over the long-haul of your ownership. Let us take a look at a few different ways to mitigate the overall, inevitable depreciation of a vehicle while it is on your watch.

Buy used

Once you drive off the lot of a dealership with a new car, you are losing valueright off the bat. Some estimates place the value depreciation as high as 20%, a percentage that can be minimized by buying used. If you consider the value depreciation of buying a used car versus buying a new car, it is lower because the drive-away value of 20% when it was new is factored into the cost of buying the used vehicle. Now, a stable, annual depreciation of 7%-12% takes place, but that is also part of the price you are paying for the vehicle, depending on how old it is.

A vehicle that is around two to three years old is the ideal time to pick it up; it is still fairly new, but available at a steep discount of 60% to 75% of its brand new sticker price, or possibly even lower. Make sure the model and manufacture year has the key amenities and features you are looking for, and of course that the car is still in good condition and no one is trying to pull the wool over your eyes.

Choose well, and hold on to your cars

If you buy a model that has a high rating for its reliability and fuel economy, chances are that car will retain its value relative to other cars that came out around the same time as it. So, choosing a model that has a high chance of retaining its value is a great way to minimize the chance of depreciation.

Additionally, if you hold onto a vehicle like this for a while, you can make sure that it is well-maintained (better than other owners of the same make, for instance), thus appreciating its value relative to that of other cars that may have passed through multiple owner’s hands. When it comes time to sell it, yours will appear more appealing just because it has been in somebody’s hands for so long. If you do happen to buy new, hold onto it until it drops dead to ensure you get the most value out of it. Trading in after two years is one of the worst value trades you can make.

Maintain well

This may seem like common sense, but regular tune-ups are essential for keeping the vehicle in good condition and maintaining the value of the car as much as possible. This will also keep you safer, which is a good enough reason in itself to schedule regular tune-ups. Maintaining the value of your vehicle by implementing effective strategies to prohibit its depreciation will ensure that you get the most value out of your purchase.

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