Used Car Depreciation Notes: How To Know Which Used Cars Depreciate The Least?

Buying a car is more difficult than it seems. You are supposed to research, review and know all about car models, dealers, related features, insurances, finances and few other decisions. This doesn’t only take time but can also lead to an expensive deal if not taken properly and when you go for a used car, the process grows even more complex.

You are supposed to look at many other important considerations that are involved in buying a new car. A used car is a risky decision, and your savings can go down the drain, if you can’t make the best deal. If you also have this question in your mind that which used cars depreciate the least then you are at the right place.

How to choose an old car?

The best approach for buying an old car is to do the best research and then come to a decision. Following are some tips before you go to purchase a used car:

• Decide which car you want to buy, be clear with the specifications and model of the car.
• Get the complete information about the car you decided to buy and if you have selected one confirm how old exactly it is.
• Decide your budget and search for the car within that limit; it will give a clear idea about what options you are getting.
• Take a test drive of the car so that you can get the experience of the car you are going to buy.
• Examine the interiors and exteriors of the car and make sure they are in good condition.
• Check for any unpaid liability on the car be it the EMI or the insurance.
• The most important point is to change the ownership so that you can own the car legally to avoid any future complications.

With the following things in mind, a used car can be bought with good processes. However, there is another concept that is associated with used cars; it is car depreciation. You also need to know what it is and which used cars depreciate the least.

What is the car depreciation?

In simple terms, depreciation is the value of an object that is lost over time. So if we look for car depreciation, it is the value of the car when it is new and its value lost over time and when you sell it. The depreciation starts the moment you buy a new car.

Depreciation of new car

The rate of depreciation is faster in a new car as compared to old ones. Unfortunately 10% of their value is lost as soon as they are driven off the lot. After a year the depreciation takes off 10% or 20% of the initial car value. Five years of a new car will bring about 60% of the original value. Trading in of the car will be much lower if you sell it after the fifth year.

Depreciation of used car

A new car is already depreciated by 10% in the first year. So buying a used car will save you depreciation by 20% to 30%. The saving could be more if you are up to buying a used car with more age.

Depreciation of leased car

Another option you have for buying a car is a leased one. The lease cost will include the depreciation cost along with the taxes and interests. If you are up for holding a lease for your car, there is no way you will face a loss. The lease can be profitable if the sale price of your car is more than you paid to buy it.

What are the factors that affect the depreciation of cars?

All the cars do not depreciate at the same rate. Certain factors affect the depreciation rate of a car:

• Age: The age of the vehicle is a prime factor in deciding the depreciation rate. The car loses the most in the first year than in consecutive years.
• Mileage: The depreciation is also affected by how much the car is driven. The more the car is driven, the more wear and tear it has experienced.
• Brand: Some brands hold value even after a long time. This is owed to the repair costs, demand and warranties.
• Paint color: A unique color will make your car stand out and let it hold a greater value. This will decrease the depreciation value.
• Running costs: The maintenance costs of your vehicle are also an important factor to decide the value of the car. An expensive running and service cost will increase the depreciation value.
• New Models: The efficiency of the model will also decide the depreciation. The model which is more reliable and swift, will depreciate slower.
• Warranty: A car that still holds a warranty has more value than a car without any. Some of the warranties are even transferrable, making it less depreciable.

 How to reduce the depreciation while selling the car?

There are a few ways that can make the depreciation reduce so that your car holds more value:

• You should drive safely and avoid any accidents to avoid repairs.
• Show a lot of care about your car. Service it regularly and maintain it with routine detailing services.
• Limit up your mileage as cars with high mileage depreciate faster.
• Buy a leased or a used car as this can help you avoid the depreciation costs. The lease will include the car’s depreciation cost and eventually result from increasing the car’s value.
• Choose the right car that is a better model and known performance. Also chose brands that offer effective repairs and services.
• Seek a warranty for the car so that you can reduce the depreciation.
• Go with the features that enhance the durability and efficiency of your car.

Which cars hold less depreciation?

After knowing the aspects of depreciation, it comes to which used cars depreciate the least. Depreciation is the factor that determines the value of the car. The deprecation depends on many factors to decide the present value. A few of the cars depreciate less than the others. So eventually some cars are better in the long run with low depreciation. The brands that offer better maintenance are the ones that stand top in the list.

Buying used cars can be a good decision to avoid the depreciation costs. But before you buy a car, make sure you do the proper research and get the perfect deal.