We all know that cars lose value, depreciating by as much as 20%[i] the second that they’re driven off of the car lot. In the first year of ownership, some cars can lose a further 30% in value,[ii] making automobile depreciation the single most significant cost of owning a new car.
“Whether new or secondhand, owning a car is an expensive necessity. Buying a vehicle is just the start, with regular services, annual registration and insurance premiums needing to be paid after the car is purchased. 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,” said Abigail Koch, spokesperson for car insurance comparison service comparethemarket.com.au.
Comparethemarket.com.au reveals seven things to keep in mind when buying, selling or looking after a car, to minimise your depreciation costs.
- Mileage and mechanical maintenance should always be top of mind
The more mileage on your vehicle, the lower its value. The average person clocks up 14,000 kilometres[iii] on their vehicle in a year. Driving more will mean that your car’s rate of depreciation is higher.
- 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, anti-lock brakes, cruise control, remote start, leather seats, entertainment and navigation systems, and sunroofs.
On the other hand, “aftermarket or performance-based accessories can put off potential buyers. Add-ons that affect suspension or safety features could nullify warranties or add to insurance costs down the line,” Abigail says.
- Keeping things clean
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, and scratch and dent free, to give you the best resale price. Further, “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,” said Abigail.
- 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.
- 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,” said Abigail.
- 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.
- Colour is more important than you think
“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 good idea at the time, you may regret the decision when you try to sell it,” said Abigail.
“Finally, many motorists 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 switching each year can help you save,” said Abigail.
For further information, or for an interview, please contact:
Hannah Twiggs, PR Assistant, comparethemarket.com.au
Tel: 07 3377 8879
Comparethemarket.com.au is a comparison website that makes it easier and quicker for Australians to compare and buy products and services they rely on in their everyday lives. Whether you’re looking for a good deal on your car insurance, health cover for you and your family, the lowest fuel prices in your area, or an energy provider that suits your needs, then go to comparethemarket.com.au. It’s a completely free service and enables Australians to make purchasing decisions with greater knowledge, confidence and savings.