Buying a car is one of the bigger investments you’ll make. Unfortunately, most vehicles dramatically depreciate in value when you drive them off the lot – by as much as 20%! So how can you hold as much of that value as possible from the time you buy your car to the time you eventually sell or trade it in? We have a few tips to make every dollar go further and last longer.
What Is Depreciation?
Depreciation is the process by which an asset or item loses its value. So, the longer you own your car, the more the value decreases. A car that’s 5 years old is obviously worth less than a car that’s brand-new and sitting on the dealership lot. But did you know that a vehicle may lose up to 75% of its value after 5 years?! Think of depreciation happening in a curve and that curve is the steepest for brand new cars.
What can I do to minimize depreciation?
Depreciation is unavoidable and happens to every vehicle. Here are some tips to minimize how much your vehicle will depreciate by.
- Choose a popular make and model
When buying a vehicle, consider models that are consistently among the top-selling vehicles in Canada. Typically, these are vehicles that have good fuel economy, low running costs and a reputation for reliability.
- Pick a popular colour
It’s best to stick to traditional colours. Timeless colours like white, silver, black, deep reds, and blues are easiest to sell down the road.
- Buy used
Let someone else pay for the depreciation. New cars depreciate by more than 30% in the first two years on the road. It makes more sense to buy a car that’s used. If you’re worried about buying used, remember that vehicles should come with a history report so you can see the cars past.
- Keep servicing records
One of the best things you can do to retain your vehicle’s value is keeping your car up to date with servicing, maintenance, and repairs. Keep a folder of all the records to prove you looked after the car correctly.
- Keep mileage down
It’s totally ok to drive your vehicle – that’s what you bought it for. But did you know that vehicles with higher mileage will depreciate more? The average car will rack up 20,000 km per year. Anything higher than that could negatively impact your vehicle’s resale value.
Why does resale value matter?
Most of us don’t drive our vehicle until its last functioning day. You’ll probably want to sell it or trade it in before then. By buying a car that holds its value over a long period of time, you’re saving money in the future. You’ll be able to get more money back when it comes time to sell or trade in.
Tip: Curious about how much your vehicle is currently worth? Check out CARFAX’s Value range estimator.
What are the best resale car brands to buy?
What you pay for your car is a super important consideration, but what the next buyer will pay for it can be just as important. If you’re looking to get more bang for your dollar when buying a vehicle, there are certain brands that are known to hold their value because of their reputation for reliability. To help you find a model that usually depreciates slowly, check out some of the vehicles on the Canadian Black Book Best Retained Value Awards list. We’ve also created a list of brands below to help:
- Land Rover
With these tips, you can be confident that your next vehicle purchase will hold its value. Not only will you’ll save money in the long run, but knowing you’ve maximized the value of your hard-earned dollar will make you feel really good about your investment.