Understanding Car Value Depreciation

When you are buying a car, whether new or second-hand, you have to be prepared to understand that the value of that car decreases the moment you drive off the dealership. This is called depreciation, and in this article, we will take a look at what depreciation is, what to expect after buying a car, and how you can keep the value of your car at a reasonable point for when you want to sell it; if you ever decide to sell it.

Depreciation, Explained

In simple terms, depreciation is the decrease in the value of a vehicle from the time you bought it. It is the difference between the purchase price and the selling price. Depreciation is not the same for all cars, but for most cars, it is around 15-30% per year. The first year of depreciation is usually the most severe, and a car can depreciate by as much as 50% in some cases.

By the time your car reaches 5 years, it might be worth half of what you paid. You cannot ‘run away’ from depreciation, but you can help retain a bit of value on your car.

Minimise Depreciation

Most people often wonder why they cannot sell their cars for at least 70% of what they paid, and some of them make common mistakes such as buying a car in colours that are not usually sought after. Colours such as black, white, and silver are a favourite among many people as they are timeless. Consider buying a car in these colours.

You should also consider buying a car with the type of features people look for in cars; central locking, alloy wheels, CD/MP3/Bluetooth player, navigation equipment, parking assistance, anti-lock braking system, etc. Useful features like these help when you are ready to sell your four-wheeled baby.

Fuel Economy? Of Course

We cannot stress how important a car’s fuel consumption is to its value – especially when you are considering reselling. A protip from us would be to be upfront and honest from the get-go. You should also consider buying a car that has low fuel consumption. Not only is this great for reselling, but great for you too while driving it because with the way the fuel prices are set up in this country, who doesn't want a fuel-saving car? Exactly. While on the fuel, another way to minimise your car’s depreciation value is to keep it well maintained and serviced. Servicing your car makes it better for the next buyer and helps you retain the price you are thinking of selling it for. So, make sure your car service is up to date and standard.

Avoid Hectic ‘Upgrades’

We know it is tempting to add personal touches to your car in an effort to ‘make it your own’. But if you are thinking of selling your car, you must remember that not everyone is into the same bells and whistles you may be thinking of adding. Keep your car as ‘basic’ as possible and make it easy for the next driver to personalise, should they want to. Adding upgrades to your car can cause more depreciation than appreciation.

If You Yourself Are Looking At Buying

Are you looking to buy a car from a pre-owned car dealership? Being on the WesBank website already puts you at an advantage as most of South Africa’s drivers trust us with second hand vehicles. Not only do we offer affordable vehicles, but we also have financing options as well as tips to upgrade your car without making it lose its value. WesBank is your one-stop car-formation hub, and we are not afraid to go the extra mile to find you all the info you need.

Final Thoughts

When thinking about buying a car, ask yourself if you are planning on reselling it at a later stage. If you plan to, then consider the above tips, and speak to your car salesman about the options you have when that time comes. In the meantime, enjoy those open roads and may you keep exploring more in the driver's seat.