How Much Value Does My Car Have

Owning a car in modern times is a necessity rather than a luxury due to increased need for mobility. Whether you are in school or working in a busy city, you need to purchase a car in order to get around more efficiently. While it is true some American cities such as Washington, Philadelphia, Oakland, San Francisco and Seattle are great for public transport, the unreliable nature of buses and trams makes owning a vehicle more convenient.

Well, people buy homes because they know they will appreciate and build equity. For instance, your home can earn you a lot of money if you decide to refinance 10 years down the line. However, things are different when it comes to cars. Your car might be a very expensive purchase but unfortunately, it starts losing value the minute you drive out of the dealership.

Gone are the days when cars were status symbols. Unless you are buying the latest Ferrari 488 GTB 2dr Coupe or a similarly priced Lamborghini, your car will not pass as a status symbol. Well, the fact remains you need a car for your day-to-day life.

Like with any other big financial expenditure, you have to consider the value of the investment you are making. This is a crucial step in improving your financial wellbeing. You might think that the expensive car you wish to buy is a good investment but it is only through evaluating its true value that you can determine the actual value of this purchase.

Below are some highlights that will help you know the value of your car. Take a look:

How Your Car Depreciates

Assume you buy a new car for $31,252. This is of course a big expense that will have a great impact on your finances. The question then becomes what will happen to the value of this expensive purchase. According to research, your car will be worth 11% less the moment you drive out of the dealership. This amounts to $ 27,814.

The value of your car depreciates further by 25% within one year and by the third year, the value will have dipped by 46%. By the fifth year, your car will have decreased by 63%. These figures reflect how much your car is worth the moment you buy it and in a few years.

With these figures in mind you are able to understand how much you should spend on a new car considering how much it will be worth when you resell it a few years down the line.

It is important to note that a new car’s value depreciates faster than an older car. This is one reason why used cars are still popular with buyers.

What Affects the Value of Your Car?

Many car owners wonder what leads to different valuations for different types of cars. For instance, if you buy a Volvo S60 and a friend buys a Chevrolet Colorado, you will be surprised to note that in a few months, your highly priced Volvo will have depreciated a lot. In fact, the model was listed in 2016 as one of the cars with fastest depreciation rates. On the other hand, the Chevrolet Colorado is back after a hiatus and boasts one of the highest resale values. In essence, the type of car you own will determine its value in case you want to resell.

However, it is important to note that while a car might be one of fastest depreciating rides, this does not necessarily mean it is unreliable. Some car models are just unpopular and they never catch on with buyers. If you are unlucky to buy such a car, you will be stuck with it for a longtime unless you want to get rid of it at any cost.

There are other things that will affect the value of your car in the long run and they include:

• Mileage – The higher the mileage, the lower the value of your car.
• Reliability – According to consumer reports, some unreliable car models include Ford Fiesta, Fiat 500L, Chevrolet Tahoe and GMC Yukon, RAM 2500, Tesla Model X, Chrysler 200, Ford Mustang, Lincoln MKC, and Dodge Grand Caravan to mention but a few.
• Service history –An incomplete service history decreases value of your car.
• Recent upgrade – A recently upgraded model is more desirable than the older version.
• Length of warranty – Longer warranty, say 7 years, is great for resale value.
• Size of your car – Bigger luxury cars cost more to run as they age. Therefore, smaller cars have a higher resale value.

Why Worry about Decrease in Car Value?

If you are constantly wondering how much your car is really worth, it is important to learn more about depreciation. Now that you know how this can affect the resale value of your car, you already have some basic understanding of your car’s value. By understanding how your car loses value, you are in a better position to avoid potential problems, especially if you are servicing a loan.

If you intend to resell your car after 2 or 3 years, it is more advisable to purchase your car on a lease. Selling your car after such a short duration causes you financial loss because of the quick rate of depreciation.

To appreciate the true cost of car ownership, consider that fuel is the biggest day-to-day running expense yet it is depreciation that costs you more during the entire period of owning your car. In fact, research shows depreciation costs you more than 3 times the cost of fuel.

There are some vehicles which are great at beating depreciation including Land Rover, Tesla, Maserati, Audi, Mini, Jeep, Mitsubishi, Mazda and Lexus.

How can you get the maximum value from your car? Keep the mileage down if you plan to resell, buy a used car for better value, avoid modifications, choose the right colored car, look after your car carefully, sell your car before the replacement model is released.

It all boils down to staying in the know if you want to get the best value for your car. Some cars are worth more during some seasons and in some regions. For example, a four-wheel drive is perfect in areas where outdoor activities are popular. A luxury sedan on the other hand will get higher valuation in the city. Make sure you do your research in order to understand the true value of your car at any time.

Charlie Brown is a freelance content writer. He has written many articles on different categories like Technology, fashion, finance, travel, health, etc. To know more about him, please his blog.