How to maintain your new car’s resale value
As soon as you drive a new car off the lot, its value drops. How much depends on the type of vehicle and how you use it.
Keep reading to learn more about the factors that influence a vehicle to depreciate, and how you can get the most out of your new car purchase.
How quickly does your new car’s value depreciate?
Some experts estimate a vehicle’s value decreases by 10% after the first month of ownership, and by more than 20% after the first 12 months. Over the next four years, value depreciation slows down to approximately 10% annually. This means that your new vehicle could be worth as little as 40% of its original purchase price after only five years of ownership.
What factors influence vehicle depreciation?
One of the major factors that influences depreciation is mileage. On average, most drivers will put 20,000 km on their car per year. If you’re driving more than that annually, expect your car’s value to depreciate faster.
Other factors that can also impact depreciation are:
- Vehicle’s age
- Accident history
- Fuel efficiency
- Customizations like paint colour or third-party accessories
- Newer models with significant upgrades
How can I protect the value of my car?
To help maintain your vehicle’s value, here are a few simple tips:
- Maintain your car regularity and keep the records
- Fix dings and dents right away to avoid rust spots
- Wash and wax your car and keep the interior clean
- Invest in a set of winter tires to reduce the likeliness of an accident
- Choose carefully where to park
- If possible, keep your car in a garage to shield it from the elements
Additionally, high demand vehicles will retain value better over time. For example, when fuel prices are high, hybrids and more efficient vehicles tend to hold onto their value.
How can I get the most out of my car purchase?
Buying a car is a significant investment, so you want to preserve its value as much as possible.
One way to do this is by adding a limited waiver of depreciation onto your auto insurance policy when you purchase a brand-new car.
What is a limited waiver of depreciation? This means that if you have a total loss claim for your vehicle, the insurance company will not deduct depreciation from your claim amount. The insurer will either give you the same amount you initially paid for the vehicle, the manufacturer’s list price for the vehicle or the cost to replace with a similar vehicle, featuring the same options.
A limited waiver of depreciation is only available if you are the first owner and must be added at the time of purchase or lease of the car. Depending on your insurer’s policy, this coverage can last from 24 to 60 months after your purchase date. (Your deductible will still apply.)
If you’d like to learn more about adding a limited waiver of depreciation onto your auto insurance policy or if you’d like to get a car insurance quote, call an AGR Broker at 1-800-668-0250. We’re here to help!