Car Depreciation

Let’s start with the biggest single fixed cost of vehicle ownership, the car’s depreciation.

In some cases your new vehicle can depreciate as much as 20% or more in the first year alone making depreciation on your vehicle a very real cost.

Although we are all aware of this serious cost of ownership, depreciation is somewhat of a silent thief because we don’t actively think about it as we enjoy (hopefully) our car throughout the years and we don’t get a monthly bill for the vehicle’s depreciation each and every month. However make no mistake about it, depreciation is there, and how much it costs you depends upon how well your car holds it value in the market place.

If automobile depreciation isn’t something you are keenly aware of or don’t really research the market value track record of cars before you run out car shopping, you may become painfully aware of it when it comes time to sell or trade your car in.

How well you car holds it’s value in the marketplace (fends off depreciation) should be one of your primary considerations when doing your research on your next car deal.

If you are the type of car owner that generally likes to trade vehicles every 3 to 5 years (or even less), you should be acutely aware of how depreciation affects the various models and move this priority up the list when considering your next new car.

What determines the amount of depreciation each make and model suffers is at best an inexact science but let’s take a look at some of the variables:

• Cars that hold people’s attention. In a word… demand. Cars that represent status and have withstood the test of time. Higher demand against a lower supply will always keep the car’s resale value propped up.
• Cars that are not well known or have had unfavorable press, problems with maintenance, or safety features will generally have a lower resale value.
• When the price of a certain model of a new car continues to increase, this will have a tidal effect on the used car or resale side of the market.
• When the manufacturer redesigns the body style of a model, the now older body style of the same model will usually suffer a hit on its resale value (planned obsolescence by the manufacturer)
• Mileage on the vehicle will play a large part in how much the vehicle has depreciated.
• Which model in a particular line up can also affect the resale value. For example, the base model in a particular car model may actually lose less in relationship to the selling price than would the same mode that was purchased with all the bells and whistles.

Let’s take a look at some strategies you can use to help you suffer less depreciation on your car.