The cost of car ownership can be steep, particularly with rising fuel costs and the ever-shifting algorithms of car insurance premiums. Another cost that is just as significant yet easy to forget is that of depreciation. The simple act of driving your shiny, brand-new car out of the showroom can instantly reduce its value, and many cars lose as much as 50% of their value in the first three years of ownership. This can be a real problem if your car is stolen or written off in an accident, because insurers will only pay out the value of your vehicle at the time of the theft of accident. It’s not possible to eliminate depreciation completely, but there are a few ways to slow it down. This way, when the time comes to sell your car in the future you’ll get more of your money back!
Buy a Car Known to Hold its Value
A gas-guzzler in a shade of lime green may take your fancy, but you want to look at the big picture. Cars that are bound to appeal to the widest possible range of buyers will hold their value over time. Choose a reliable brand in a non-offensive colour and ensure that it’s kitted out with all of the trim options that will make it appeal to buyers. As you read auto reviews on sites like Motoring.com.au, take note not only of automotive features and running costs, but also of depreciation value. Take price into consideration as well. Sometimes it doesn’t make sense to splash out on a big, fancy car, because this gives you more to lose.
Buy Car Depreciation Insurance
Guaranteed asset protection insurance is designed to help cover the difference between what you paid for your car and what you’ll receive in the event of a theft or write-off. Consider purchasing a GAP policy if you’re worried about losing money due to depreciation from an insurance perspective. This type of policy usually applies to vehicles under seven years old, and under a certain mileage number.
Research Automotive Trends
Although we can’t predict the future, if you stay current with automotive trends you may be able to predict what type of cars are likely to be valuable in the future. For example, eco-friendly cars are always in high demand, and should continue to be valuable in time when fuel prices have gone up even more. Safety technology is also growing in leaps and bounds. Look for cars with automated safety features that will be seen as standard in only a few years.
Keep the Mileage Down
If possible, try to keep the mileage low. This will not only save you money on running costs, but it will also help keep your car’s value high.
Keep Maintenance Records
It’s one thing to choose a car known to hold its value well over time, but if you run it ragged and never take it in for servicing it will plummet in value. Take your car in for regular maintenance visits and service checks to help keep it running in top shape. Be sure to keep detailed records of these visits to show buyers in the future.
Fighting depreciation involves a combination of research and maintenance. You may not be able to stop it in its tracks, but you can certainly help protect your investment with a bit of care.