Your new car is a perfect machine until it’s delivered to you! The wear-and-tear begins right from the moment it is driven off the lot…and that’s when it starts losing value. So, what is depreciation on a car? Simply put, it’s the value lost (difference) between the price paid and its current value.
What Makes the Car Lose Its Value?
Your car always looks perfect to you. But to understand its market value, you need to look at it objectively. Every year, a manufacturer releases new models, making older models irrelevant to new buyers. You can avoid car depreciation to a certain extent by ensuring proper maintenance and keeping it in good condition.
What Are the Factors That Cause a Car to Depreciate?
- Reliability: Certain manufacturers have a reputation for making cars that are reliable for a very long time.
- Desirability: If your car is a top-rated model, it could be less prone to depreciation.
- Mileage: This is a primary factor in determining car depreciation.
- Size: SUVs or MUVs depreciate faster than normal cars as the fuel economy degrades more quickly in big vehicles.
- Service history: Maintenance logs play a critical role in defining your car’s value.
How to Avoid Car Depreciation
Car depreciation is inevitable! You can only slow it down by taking proactive measures. Minimize your loss by following these tips!
Tips to Minimize Car Depreciation
- Regular checks: Keep your car in an optimum condition. Don’t delay any service or repairs.
- Stay away from modifications: Avoid any fancy modifications! This only makes it less desirable to average buyers.
- Use popular colors: Avoid unusual colors as they might put off most buyers. Stick to black, silver, and white.
- Selling at the right time: Try selling it off before the new model hits the headlines.
- Gap insurance: With this, your insurer will pay you a certain amount of depreciation, depending on your coverage.
If you’re looking for experts who will help you get the right insurance for the lowest market rates, you can contact Mike Leonard Insurance Agency. Our dedicated team is eager to find you the right coverage from one of our many carriers, including Kemper, MetLife, Nationwide, Travelers, Safeco Insurance, Progressive, and American Strategic Insurance.