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10 things driving the value of your car into the ground

5 min read
27 May 2016

When purchasing a brand new house, you buy it with the expectation that the value will rise over time. Yet, when it comes to cars, this is not the case. We all know that cars lose value, but did you know that cars can depreciate by as much as 20%[i] the second they’re driven off the car lot? And if you think that’s bad; in the first year of ownership, some cars lose a further 30% in value[i].


It’s no surprise that automobile depreciation is the single most significant cost of owning a new car. Buying a vehicle is just the start, with regular services, annual registration and insurance premiums needing to be paid after purchase. While you can’t stop your car from depreciating, there are a number of things to keep in mind if you want to slow the rate of it. Drivers everywhere can now have some control over their vehicle’s value, rather than waiting for the money to slowly slide away!

Here are ten things to keep in mind when buying, selling or looking after a car, to minimise your depreciation costs. We also throw in some tips and hints on how to sit pretty in the driver’s seat this year.

1. Mileage and mechanical maintenance should always be top of mind.

The more mileage on your vehicle, the lower its value. This may seem pretty simple but watching your mileage is something every driver should do. The average person clocks up 14,000 kilometres[ii] on their vehicle in a year, and driving more than necessary can mean your car’s rate of depreciation grows.

2. What buyers really want

Not all cars were created equal, so when buying a vehicle, consider adding options that have a positive influence on the resale value. Buyers look for things like automatic transmission, power windows, power locks, cruise control, leather seats, entertainment and navigation systems, and sunroofs. It’s all about the high tech in the end!

On the other hand, aftermarket or performance-based accessories can put off potential buyers. Although that chrome hubcap or loud exhaust may have seemed like a good idea at the time, add-ons that affect suspension or safety features could nullify warranties or add to insurance costs down the line.

3. Keeping things clean

In this case: looks do matter. A small dent can be the difference between whether a purchaser thinks your car is in a ‘Fair’ or a ‘Poor’ condition. Make sure you keep your car looked after – scratch and dent free – to give you the best resale price.

Also, before trading in your vehicle for a better model, make the effort to restore the interior of your vehicle to appear as new as possible. Neglecting to take care of the interior appearance can decrease resale value by thousands of dollars.

4. Pick the right brand

Subaru, Honda, Hyundai, Mazda and Toyota have a good reputation for maintaining their value. In Australia, the top five selling cars are the Hyundai i30, Toyota Hilux, Toyota Corolla, Mazda 3 and Ford Ranger[iii]. So, have a shop around and pick a car that has the value and popularity behind it.

5. Keep your car for as long as possible

If you plan on purchasing a new car, you can spread the cost of the high up front depreciation over time by holding onto your vehicle for as long as it runs. This is one of the best ways to get your money’s worth. By the time your car is 10 years old, its depreciation rate is insignificant. Additionally, try to avoid trading in your car every few years as the first three years in a car’s life are the most expensive.

6. Let someone else pay for your car’s first drop in value

When you purchase a pre-owned car, you will save a large amount of money on depreciation as the previous owner will have incurred a significant portion of the car’s total depreciation. For even a relatively new three year old vehicle, the previous owner could have incurred up to half of the car’s total depreciation.

7. Colour is more important than you think

Believe it or not but the colour of a vehicle can impact its resale value. For example, a black car in a warm climate is less desirable than a light one. Additionally, while that bright orange Camry might have seemed like a stylish choice at the time, you may regret the decision when you try to sell it.

8. Researching important towing specifications

Over time, over-towing your car will stress your engine and could lead to costly repairs in the future. Before buying your car, understand the suggested towing parameters.

9. Rebates and incentives impact your car

Do your homework: If you’re in the market looking for a new vehicle, make sure you research rebate and incentive information to understand if a new model is worth more than a two or three year old model.

10. Switching and saving

Finally, many people are baffled as to why the value of their car goes down each year but the price of their insurance premiums continues to rise. To keep your insurance as affordable as possible, it’s important that motorists don’t stall and allow their insurance policy to automatically renew each year. Loyalty doesn’t often pay and this is when you’ll see your premiums accelerate. Keeping on top of your insurance, and switch each year to help you save.

Keep ahead of the game and do your research, car values don’t have to bring you down. Rev your way to the top and find the vehicle that’s right for you.

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