One thing you need to understand before moving forward with your car purchase plan is that cars depreciate. Depreciation is a method used to calculate the cost of a physical asset over its useful life. Cars typically depreciate in value after use and are sold for less than their original purchase price.
Falling prices can lead to unexpected losses, and it's normal to feel wrong about any financial move. In order to avoid losses, it is recommended to consider depreciation before consulting a car dealer. Better yet, consider some practical ways to avoid car depreciation altogether.
Can you avoid car depreciation?
Car Group | Photo Car Group Cho Sung Joon by Getty Images
A vehicle's depreciation rate depends on many factors, but one common factor is its age. According to Money Helper, depreciation in the first year ranges from 15% to 35%.
However, it could increase to 50% or more after three years. This means that the car will cost him 40-50% less than its original purchase price after three years. For example, if a car he bought for $40,000, after three years of use, it would be worth $20,000 to him, or $16,000 after deducting the purchase price.
Another reason cars depreciate is the number of owners. If a vehicle goes through multiple owners, its value is lower than if it had fewer owners. A number of previous owners can be found through his V5C registration with the UK government.
Vehicle mileage is also important. A vehicle with high mileage is cheaper than a vehicle with a few miles in a year. A loss like this is heartbreaking and can make it not worth the investment, especially if you have a newer car.
Before investing in a car, it's a good idea to understand that cars perform differently. New cars have different depreciation rates depending on the make and model, so choose the one that best suits you. Car buyers can use Vincentric to find the best value car for their investment.
The Vincentric Award for Best Value Car of 2022 in the Midsize Passenger Car category goes to the Toyota Camry at 4.4% less than expected. Such a car doesn't lose much value in that period of time, so you won't regret it after 5 years of service, despite the 24% depreciation.
buy used car
Car owners are affected by depreciation, mainly because they choose new cars. Selling the new car to his second owner, regardless of the number of days of use, will greatly reduce its value. Save money by buying a used car that is 3 to 5 years old.
The nice thing about vehicles like this in this era is that they have the same protection as newer vehicles. This is due to our Certified Pre-owned (CPO) program and extended warranty. Such vehicles also wear less and cover considerable mileage.
As stated by Global Mobility, the average age a vehicle spends on the road is 12.2 years. Also, the vehicle cannot exceed 200,000 miles. So buying a 3 year old car 40% less than the original price and getting more mileage is a good choice.
Rely on timing when trying to avoid car depreciation
Another way to avoid the impact of car depreciation is to work over time. Please note that the depreciation rate will be higher if the ownership period is less than 1 to 3 years. Depreciation expense will be higher than after 4 or 6 years. Therefore, selling a car at the right price requires the right timing to avoid the impact of depreciation.
