Did you know the average new car loses around 50% of its value by the end of year three? We know that’s a scary figure, but it is possible to minimise depreciation in a number of ways — one of which is keeping your car in a good, well-maintained condition.
Sadly, it’s a lot easier to devalue your car than it is to retain its value. Depreciation happens no matter how well you take care of your car, but there are certain things you can do to speed up the rate at which value is lost.
In this guide, we take a look at all the different factors which can devalue your car, from covering too many miles to buying a car in a bold or statement colour. We’ve also provided a bit of background on what car depreciation actually means, so you can get to grips with why retaining your car’s value is so worthwhile.
- What is Car Depreciation?
- What Affects a Car’s Value and Depreciation Rate?
- Tips for Reducing Car Depreciation
What is Car Depreciation?
Car depreciation is the difference between your car’s value when you’re buying it and then selling it. It’s one of the biggest costs motorists face, but because it happens without money leaving your bank account, it’s an easy expense to ignore.
Typically, the value of a new car drops by 15%-35% in the first year of ownership and up to 50% in the next three years. So, if you bought a car for £15,000, it will likely be worth around £7,500 after three years. That’s a loss of £2,500 a year, or £208.33 a month.
The rate at which a car depreciates in value isn’t set in stone, however, and there are things that can be done to retain value. For example, cars which are well maintained are usually worth more than identical models which haven’t been given the same care.
What Affects a Car’s Value and Depreciation Rate?
It’s surprising what affect a car’s value, with even things like missing service receipts and small stains or scratches shaving £££s off the resale price. Below, we list some of the things which can devalue your car and increase its rate of depreciation.
- Mileage – There’s a reason why cars bought on finance have a mileage cap: it’s to retain the resale value of the car. Mileage affects value more than anything, and is capable of cutting hundreds of pounds from the value of a car.
- Reliability and brand reputation – Some makes and models retain their value better than others simply because of the brand’s reputation for reliability and build quality. For example, a Volkswagen will retain its value better than a Vauxhall because of the prestige attached to the brand.
- Service history – People want to see that a car has been well looked after, so if the service history’s not complete it will be harder to sell and buyers can use it to haggle the price down.
- Size and practicality – Big cars depreciate faster than small ones, simply because they’re more expensive to run and the demand for them isn’t as high. This could be something to consider when deciding on your next car.
- Fuel economy – With taxes rising for higher-emission vehicles, fuel economy is becoming a big driver of depreciation. Small, economical cars now hold their value better than fuel-thirsty models.
- Modifications – Personalisation and modification can devalue your car and make it harder to sell, so to maximise the potential resale value you should keep your car in the condition you bought it.
- Damage to the paintwork – Scratches, bumps and dents can make prospective buyers think twice as they give the impression that your car’s not been cared for. They could also be an early indicator of rust and corrosion, which is sure to put people off.
- General wear and tear – Stains, muddy shoes, smoking; everyday wear and tear can take its toll on the value of your car, so you should take precautions to make sure it’s kept clean and tidy where possible.
- Poor washing and cleaning practices – Washing a car isn’t hard, but it’s easy to get it wrong – especially if you start with the wrong type of cleaning products. For instance, washing up liquid is not suitable for cleaning your car, as it will strip away its protective wax coating. Understanding how to wash your car and protect the paintwork will help you retain its value.
- Colour – That’s right, some colours retain their value better than others, so think carefully before opting for that bold orange or vivid yellow.
Tips for Reducing Car Depreciation
Here are some tips and tricks to reduce your car’s depreciation rate:
- Repair damaged bodywork – Whether you leave it to the pros or have a go at fixing the damage yourself, ironing out any damage will ensure you get the most for your car.
- Keep the interior clean and tidy – Sticky fingers, dirty shoes and food dropped on the upholstery can cause stains and smells. Always carry interior wipes, rubbish bags and a suitable interior-cleaning product to preserve the inside of your car and to keep it looking and smelling fresh.
- Don’t smoke in your car – Smoking behind the wheel is a sure-fire way to decrease the value of your car because the odour of stale cigarette smoke is very difficult to get rid of. On top of that smoke will discolour your car’s interior overtime, making it more difficult to sell on. Do yourself a favour – never light up behind the wheel.
- Learn how to look after leather and upholstery – Taking care of trim like leather and upholstery will make sure your car stays looking its just-bought best; read our guide on how to look after upholstery and how to look after leather car seats and trim.
- Choose the right time to sell – If it’s nearly time to sell your car, do some research and be smart about the timing. The time of year can affect how much a car sells for, with – believe it or not – convertibles selling better in summer and 4x4s in the winter. You should also research when a new model of your car is due to be launched; people are less likely to want an older model, so this could affect the price you get.
If you’re afraid everyday habits could be devaluing your car’s future resale price, the range of quality car cleaning products from Simoniz can help your car look its showroom best for longer. To find out more, visit the Simoniz website.