Factors that Impact Used Car Value over the Long Haul
Buying a car, whether it's new or used, is an expensive proposition. As a matter of fact, buying a car is the second largest purchase many of us will make, next to our homes. That's why it's important to maintain the value of your used car over its lifetime, to get the best price at resale or trade-in time. You've already made a smart financial decision by buying a used car in the first place, since unlike buying a new car, you've avoided a huge depreciation hit the minute you drive off the lot. But what else can you do to maximize your finances and maintain your used car's value over the long haul? In this section, we'll show you how.
Knowing what makes a used car worth less money at resale or trade-in time can help you maintain its value
Supply and DemandThe age old law of supply and demand impacts a car's resale value, that's why it's important to consider which used car to buy, before you sign on the dotted line. For example, limited production, hard-to-get cars usually always hold their resale value better than common, easy-to-find vehicles. In some cases, you may find high-demand older vehicles worth as much as, or more than, newer, low-demand vehicles. Sure, you'll probably pay more for a used car that's hard to get, but you'll probably net more at resale or trade-in time too.
EquipmentMuch like supply and demand, it's important to consider a car's equipment before you buy. A well-equipped used car, one that comes with a variety of features and functions, usually nets a higher resale value than a scaled down, base model version. However, it's difficult to pinpoint exactly how much more a prospective buyer will pay. And if you're considering loading your used car with tons of expensive aftermarket accessories, be careful. A prospective buyer might not appreciate flames painted on the side or that ear shattering sound system you installed. In some cases, aftermarket accessories can actually reduce your car's value by decreasing the number of prospective buyers who would be interested in buying it. If you're considering aftermarket accessories, a good rule of thumb is to install practical components such as navigation or security systems for cars located in urban areas, or bed liners in trucks used predominantly for hauling.
MileageDuring the time you own your used car, be mindful of excessive mileage since it can negatively impact a used car's resale value. If you can, carpool or telecommute to work and use public transportation such as buses, trains and subways. Whenever possible, bike short distances versus driving and try combining multiple short trips, like errands and shopping, into one larger trip. If you're planning a long distance driving vacation, rent a car — or even a motor home — versus driving your own car.
ConditionLike mileage, the condition of your used car has a significant impact on its resale value. Not only is it important to wash and wax your car on a regular basis (to protect it from the elements such as sun, rain, ice and snow), it's important to avoid aggressive driving to maintain the condition of its key engine components. What's more, be sure to have your used car routinely serviced, and keep receipts of those service appointments to present to a prospective buyer in the future. The care your car receives during the time you own it goes a long way in maintaining its value at resale or trade-in time.
Location and climateBelieve it or not, the area in which you live influences the price of the cars sold there. For example, people who live in snowy climates usually pay more for four wheel drive vehicles because the demand for 4x4s is greater than people who live in sunny climates. Conversely, people who live in sunny climates typically pay more for sports cars or convertibles compared to those who live in cold or rainy climates. As such, there is a direct correlation between the area in which you live and the market demand — and subsequent sales price — of the used cars sold there. Seasons also play a part in a car's resale value. Depending on the area, convertibles usually bring a higher value in summer months and four wheel drive vehicles usually bring a higher price in winter months. If you're looking to get the best price for your car at resale time, wait until the time is right.
Get pre-approved today!