Protecting Your Investment: Understanding Vehicle Depreciation

By Glossy Magazine

Understanding Vehicle Depreciation

Protecting Your Investment: Understanding Vehicle Depreciation

Understanding Vehicle Depreciation

As any vehicle owner will know, protecting the value of your car and your investment is of the utmost importance. Vehicles depreciate in value over time for a wide variety of reasons, and failing to account for such deprecation could result in financial losses for you down the line. This article will highlight some of the ways you can minimise the effects of vehicle deprecation and protect your investment.

Factors Influencing Vehicle Depreciation

There are many factors that can have a big impact on how much your vehicle will be worth in the future. Some of them are unavoidable, such as the age of the car, its mileage and market demand, but there are other factors that are within your control that you could address to avoid any potential financial losses when you come to resell the vehicle.

The condition of the car is something that is very much in your control and it’s vital that you do all you can to maintain the vehicle in the best possible condition. This includes making sure the vehicle is safe and that everything inside and outside of the vehicle is in proper working order. Failing to do so could seriously hamper your potential to reap the rewards financial as the car will be worth less to potential buyers.

Understanding Deprecation Rates

Deprecation rates are calculated in a number of ways and can vary from vehicle to vehicle. Deprecation rates can vary, but typically the value of a car can drop between 15-35% within the first year, lowering to over 50% once the car is three years or older. You need to consider this when thinking about what car you want to purchase and how long you plan on keeping it before reselling the vehicle in the future.

In some cases, people who have purchased a car using a finance option may end up owing more for the car than it is worth, and this could have serious implications financially if the car were to be stolen or written off.

Due to the deprecation of the vehicle, your insurer may only pay out what the vehicle is currently worth in light of deprecation rates, which could result in you not being able to afford to replace the car you once owned. So, if you are wondering if gap insurance is worth it, taking out a gap insurance policy would ensure you receive the original price of your vehicle should you make a claim.

Financial Considerations and Resale Value

Having a clear understanding of a vehicle’s depreciation will help you make a more informed decision when it comes to selling your car. Think carefully about what sort of investment you are willing to make and how much you can afford to lose once you have decided to take it to the market to sell.

Consider which option would be best suited for you, whether it be using a finance option for your purchase, whether that is buying it outright, choosing a financial option or leasing a car. You should also think about addressing any deprecation-related concerns ahead of putting your car on the market.