The 3 M’s of Car Depreciation and How to Slow it Down
We all know that car depreciation is unavoidable. It’s like skydiving – there’s no doubt that the only direction you can go is down. With that said, having a parachute is a sure way to slow you down and most importantly, land in one piece. Some people think there’s no way to control the depreciation of a car. But that’s not true. You can’t bring devaluation to a complete stop, but you can slow it down. All you need is an understanding of what brings a car’s value down, and the steps needed to keep it appealing. Knowledge of this will go a long way when deciding if you want to sell or trade your vehicle in. And fortunately, it’s not as difficult as you think.
3 M’s of Car Depreciation
Wouldn’t it be nice if cars were like paintings in art galleries? Over time, we could sell our cars for a fortune. Unfortunately, reality makes it the other way around, and we have to accept that buying and owning a car will result in some loss over time. As a reminder, it’s worth looking at some of the factors that add to the depreciation of automobiles.
The age of a car is a tricky consideration when discussing depreciation. The main reasons for this, is that a car’s value drops and remains steady at what would seem like inappropriate times. For example, a brand new car will depreciate steadily within its first year or two. However, a car that’s a few years old will lose value at a slower rate. Many people forget this fact, thinking that an older car (used car) is a bad choice. At the same time, though, buying a really old vehicle has its own risks too – the main issue being higher repair costs (which we’ll discuss later).
As you probably know already, some cars are known to depreciate faster than others. And some of these cars will surprise you. Some luxury and sports brands lose value real fast, while some of the more economy vehicles have won praise for the fact they remain valuable for so long. It’s important to know how your car fares when it comes to the aspect of depreciation. Even if you don’t plan on selling or trading your vehicle in anytime soon, it’s better to know in advance so that you don’t have to scramble to make decisions when the time comes to give up your car.
Closely related to the first two factors, is the issue of the market. In fact, it’s not really independent of the two things mentioned before, but it’s still worth exploring. It’s true that no car holds the same value, even if it’s a model or make known for fast or slow depreciation. Some people justify that their car is unique in some way – and it may be so due to a specific mod or – but that doesn’t mean it will greatly surpass the market price. Tools such as the Canadian Black Book will give you much more accurate figures when it comes to the worth of a car, as opposed to your own assumptions or those of friends and family members.
Selling, Trading & Hanging Upside Down
Remember, all of these things mentioned above are factors you need to think about. If you ignore them, you’ll more than likely face disappointment when it comes to giving up your car (whether by means of selling or trading it in). Knowing the resale value of your vehicle will help you make better decisions regarding your transactions, helping you to save time and energy.
The other thing to consider is the state of being “upside down”. To put it plainly, it means owing more than the original amount of your car loan – the value of your car will dip lower than the amount of your loan. This leads to a gap between your car’s perceived worth and actual worth. To keep your car’s actual value from falling too quickly, it’s worth making an effort to ensure that your vehicle is in its best shape.
So how do you actually put the brakes on car depreciation? Is there a special loophole that you need to find? The answer is no. The choices you make with your car will have a strong effect on how fast or slowly your car loses its value.
Maintain your car
It doesn’t matter how fast a car loses its value, it won’t sell for a decent price if it’s in poor shape. That’s a universal rule. That’s why you need to keep it clean, make sure it receives regular servicing, and that you make any repairs that it needs. Additionally, don’t hesitate to restore your car’s shine with bodywork and detailing. The better it looks and performs, the higher the offers will be.
Let’s say you don’t have a car, but plan on buying soon. Always think about how the purchase of a particular will affect your options in the long run. An example of buying smart would be buying a car that’s 1 – 5 years old since it would depreciate slower. Additionally, the reap the benefits of paying less on a loan. But beware of cars that are older than six years. Even if they are cheaper to afford, they are closer to the end of their life spans, meaning that the repair costs will be much higher.
Keep kilometerage down
The phrase “use it or lose it” in any context means to put something (usually a skill) into practice, so that you don’t get rusty. In terms of driving and value, you can probably say “use it…and lose it.” In other words, driving too much can also increase the depreciation of your vehicle. So unless you have to drive everywhere, it’s worth giving your car a break from time-to-time.
Slow Down, Partner
There’s no denying that a car’s value will plunge over time. But it doesn’t have to plummet. Although all cars depreciate at different rates, you can help them retain as much of their worth as possible. What it takes from you is a bit of effort. Make sure to implement what this post has mentioned, by keeping your car in the best shape possible. See to it that it’s well maintained, and that you’re not running it to the ground. By keeping these points in mind, you’ll accomplish two things: 1) You will add some years to your car, and 2) Your will hold onto its value longer. Now that’s a double win!