It’s a great feeling when all the paperwork has been signed at the dealership and the salesperson hands over the keys to your new ride. The shiny exterior and new car smell welcome you with figurative open arms as fantasies begin to play of all the places and adventures you’ll see together. Unfortunately, amid the daydreaming, it can be easy to forget that the car’s value will start to depreciate as soon as the tires roll off the lot.
Car depreciation refers to the value of a car over time and use. Depreciation affects a brand-new car just as much as a previously owned one. After the first year, the value of a car tends to drop by about 20%. Over the next four years, it may decrease by 10% each year. On the bright side, even if your car is only worth 40% of the original buying price, the parts and metal will almost always retain some value.
Since each vehicle is different in terms of usage, make and age, it might be difficult to pinpoint exactly how much the value will decrease over time. A rough estimate of the depreciation can be calculated by subtracting the purchase price from the current fair market value. However, taxes and dealership fees may not be accurately counted toward the value, as those vary between states and dealerships.
A car can depreciate in value for a variety of reasons. As with most equipment, a car is usually not worth as much as it was brand new. Some dealers may disguise the true financial worth of a car by making it appear sparkling clean for the showroom or highlighting its pros instead of the cons.
Some factors that affect the true value of a car include:
• General wear and tear
• Newer models
• The “used” label
• Accidents and damage
• General maintenance
• Number of owners
• Working features and gadgets
On the bright side, not every car will decrease in value at the same rate. The make, model, popularity and even color can play a role in a vehicle’s resale price. From the moment you start looking for a vehicle until it’s ready to be sold — and all the time in between — there are a few ways to help maintain its worth. Learn more about the process with our resource.
Courtesy Of Chrysler Used Car Warranty