General

Car depreciation guide | Pursuit

Your car is a valuable asset, but not all valuables age in the same way. Some assets, such as fine wine or jewelry, tend to increase in value over time, but a car’s value is more likely to fall as the years go by. That’s because cars are subject to daily wear and tear, which adds up over time and decreases the value of your car.

The gradual decline in an asset’s value over time is called “depreciation” and is unfortunately unavoidable for most cars. Fortunately, it can be managed with a little know-how. Let’s learn more.

What contributes to a car’s value?

Before delving deeper into car depreciation, it may be helpful to understand some of the factors that contribute to car value in general.

Age

The age of a car is an important factor in determining its value. As time goes by, a car’s likely future life and usefulness decreases, making it worth less. The only case where age can increase the car’s value is whether it’s a classic or a collector’s car.

Make, model and type

The specific make and model of a car will have a significant impact on its overall value. For example, a luxury car is typically valued (and priced) significantly higher than a family minivan. Even within the same vehicle class, some cars may be rated higher than others due to various considerations such as overall reliability as a vehicle, parts quality and more.

Prerequisite

The condition of the car affects its value. For example, a car that has been beaten up in multiple accidents or that is generally poorly maintained is likely to be worth less than a comparable car that has been kept in good condition by its owner.

Mileage

The more miles on a car, the more wear and tear it has likely experienced. This can increase repair costs, decreasing the value of the car from the buyer’s perspective.

What is vehicle depreciation?

Now that you’ve learned more about car value in general, let’s take a closer look at depreciation. As you learned earlier, depreciation is the loss of value an asset can experience over time. In other words, it’s the difference between what you paid for your car and what it’s worth now. Cars tend to depreciate quickly in the early years. In fact, your new car may lose some of its value as soon as you pull it out of the parking lot just because it’s now “used.” The good news is that after your car’s early years, depreciation eventually slows down to a more stable rate.

Possible ways to combat vehicle depreciation

Time stops its march for no one, and unfortunately neither does the depreciation. However, the depreciation does slow down. Here are a few things you could try to slow it down even further:

On a regular maintenance schedule

Cars that are regularly serviced are less likely to require major repairs. They are also more likely to be in better overall condition, which helps them retain their value.

Take good care of the interior and exterior of the car

Taking good care of the interior and exterior of your car goes hand in hand with a fixed maintenance schedule. The closer the car appears to its original, unused condition when you try to sell it, the more value you are likely to get back from the sale.

summarized

Depreciation of cars is inevitable, but can be limited. Cars wear out over time, just like humans do. However, regular maintenance and proper care of your vehicle can have the same effect on the value of the car as taking good care of yourself on your health.