Depreciation refers to the reduction in the value of any asset over time because of wear and tear. A car loses value the moment you start using it, but some vehicles lose more value than others. As a rule of thumb, cars lose 60% or more of their initial value in the first five years, but the rate of depreciation per year varies between different models of car.
Factors That Cause Car Depreciation
Some of the factors that cause cars to lose their value over time are:
- Fuel efficiency: Large vehicles often require more fuel and depreciate more in value.
- Desirability: How popular your car was when you bought it and how popular it is when you sell it causes a difference in the price. Some people often give their cars a full service or facelifts regularly to make the car more desirable to get a higher resale value.
- Warranty and service history: The longer the warranty, the lower the depreciation because it shows the car is more durable. A proper record of service history that shows the quality and safety standards of the car have been maintained increases the resale value.
How Do You Stop Car Depreciation?
It is not possible to avoid car depreciation altogether. However, these steps will considerably lower the depreciation rate of your car.
- Buy a new car in the market (at most a year old) and stick to popular colors.
- Keep the mileage as low as possible.
- Regularly service your car and keep all the records.
- Sell your car at the right time of the year (for example: sell larger vehicles like SUVs in winter) and before replacement models take over the market.
Apart from these measures to slow down car depreciation, taking an auto insurance policy is always recommended. If you have additional questions about your car coverage, contact the experts at John E. Peakes Insurance Agency today. Our dedicated team is eager to assist you with all your insurance needs in Lancaster, California.