When you purchase a new car, most likely the last thing on your mind is trading it in. But it should be. While you can’t retain that new car smell, you can preserve its value so that when you arrive at that day way down the road, whether you will be trading it in for a new one, selling it on your own, or returning it when your lease is up, you can get a good price for it.
Depreciation and Why It Matters
You can’t slow downtime, but you can slow down your car’s depreciation by taking good care of it. Depreciation refers to a car’s loss of value over time. You’ve probably heard that your car loses value from the moment you drive it off the dealer’s lot and that if you were to turn around and trade it in then and there, you’d get less than you just paid. This is probably an exaggeration since no one has tried it, but it does drive home the point that time and mileage reap a toll on a car’s value, not to mention the wears and tears of daily usage.
According to Experian, the multi-national company that specializes in consumer credit monitoring reports that new cars depreciate 20% during the first year of ownership and continue at a rate of 10% each following year. You should be concerned about depreciation on a couple of fronts. Number one, it subtracts from the vehicle’s value, and number two if you’ve financed it and the value falls too quickly you can end up owing more on it than it’s worth
Minimizing Vehicle Depreciation
When determining a car’s value, several factors must be taken into account:
- Total mileage
- Age
- Physical condition
While you may not be able to do anything about the first two, the third is within your control. Barring dents or rust, depreciation is most apparent in the interior of the vehicle — the upholstery and the carpets. It’s also where it’s mostly preventable. An investment in a set of slipcovers can protect against spills, stains, and fading. And while you could always demand passengers remove their shoes before entering the car, it’s more reasonable to purchase floor mats. They come sized to fit all vehicles and for those who don’t want to hide their vehicle’s attractive carpets, there are clear car mats.
Kelley Blue Book, a company that knows a thing or two about car value suggests other depreciation-combating steps you can take in caring for your car.
Look to the Exterior
Whether you’re a DIY type or prefer to leave it to the car wash, it pays to wash your vehicle regularly and polish it at least once a year.
Look Before You Park
Since the lined spaces in today’s parking lots are more concerned with how many cars they can pack in rather than being sufficiently wide enough to allow for getting in and out of a vehicle without hitting the neighboring car. To prevent coming back to your car and discovering dings or chipped paint, look for spaces out “in the hinterlands” — the far reaches of the parking lot where only those concerned about preserving their cars’ value are willing to take on the hike to the store or office.
And while parking in the shade will prevent fading, parking under a tree can invite bird droppings and sap drips, both of which eat away at the paint finish.
Maintain and Retain
Not only should you follow your auto manufacturer’s recommended maintenance schedule and keep up on repair issues that arise in between, but keep all your receipts. This goes not only for repair invoices, but also receipts for new tires, windshield wipers, car washes, and oil changes.
Yes, this last suggestion can add up to a lot of strips of paper, but it’s the best way to prove that the car you’re trading in, selling, or returning to a leasing agent is a well-cared-for vehicle. And that’s how you face off against your car’s depreciation.