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12 ways to reduce your car’s depreciation

Did you know the colour of your car can impact how fast it loses value?

Depreciation is one of the biggest costs of car ownership — especially if you buy new. In fact, most new cars lose 20% of their value the second they’re driven off the lot. Though unavoidable, there are ways you can limit this financial loss — from buying a car that maintains its value to keeping up with maintenance.

How to reduce depreciation before you buy

The initial depreciation you face when you drive a new car off the lot is unavoidable. But there are a few ways to make that hit a little less painful.

  • Choose the right make and model

    Pick a model that maintains its value. This typically includes cars that have good fuel economy, low running costs and a reputation for reliability. Manufacturers that regularly receive awards from companies like J.D. Power will tend to have a lower rate of depreciation because they can boast a track record of quality. The same can be said for vehicles with high safety ratings.

    This will help you get a better deal when you go to sell or trade in your car down the road.

  • Research previous resale values

    Want to know how much a car will be worth in three or five years? Do your research before you visit the dealership. You can find resale values of models from previous years on sites like Canadian Black Book and Auto Trader Canada to give you an idea of what different models might be worth in the future. Canadian Black Book also publishes an awards list every year of vehicles that retained the most value over the last 4 years. This can also help you find a car that depreciates at a slow rate.

  • Pick a standard color

    Did you know the color of your car can impact how fast it depreciates? White, black, silver and gray cars remain popular and are better at maintaining value. On the same note, you might find it harder to find a buyer for your fluorescent orange pride and joy. Keep this in mind if you’re ever toying with the idea of buying a vehicle — or painting the one you currently have — a bold color.

  • Buy used or lease

    Buying a slightly used vehicle, even if it’s just a year old, can help you avoid some of the costs of depreciation. The previous owner will have already taken the biggest hit, so you’ll reduce the amount you lose in value.

    Leasing also includes the cost of depreciation, and you may be able to get a good deal if the car’s actual resale value is higher than the buyout price at the end of your lease. Find out if leasing or buying a car is right for you.

  • Opt for a car that comes with a transferable warranty

    While most new cars come with a warranty, picking a manufacturer that allows you to transfer your warranty to a new owner can help increase its resale value — and reduce depreciation.

Ready to buy? Compare car loan lenders

Name Product Min. Loan Amount Interest Rate Loan Term Min. Credit Score Requirements Table description
Loans Canada Car Loans
$500
0% to 29.99%
3-96 months
300
Min. income of $1,800 /month, 3+ months employed
Get access to financing from multiple lenders across Canada through a single application with Loans Canada. Bad credit, CERB and EI borrowers are considered.
AutoLoanProviders
$7,500
3.99% to 29.99%
12-96 months
300
Min. income of $1,800 /month, 1+ months employed
Available in Ontario only.
Browse thousands of available vehicles and apply online from the comfort of your own home. Receive confirmation of your financing options and get your new vehicle delivered to your door anywhere in Ontario free of charge. All credit scores considered.
CarsFast Car Loans
$500
4.90% to 29.90%
12-96 months
300
Min. income of $1,800 /month, 3+ months employed
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs. Apply online to purchase a new or used vehicle and get the vehicle delivered to your door.
Coast Capital Car Loan
$10,000
Varies
18-84 months
650
Able to service debt payment of $300/month
Finance or lease both new and used vehicles with competitive rates and flexible terms from one of Canada's largest credit unions. No credit union membership required for this product.
Canadian Auto News
$7,500
3.99% to 29.95%
12-84 months
300
Min. income of $2,000 /month, 3+ months employed
Answer a few simple questions to get matched with affordable financing options. Auto loans are also available to those with bad credit, consumer proposals and bankruptcies to help rebuild credit.
Car Loans Canada
$7,500
3.99% to 29.95%
12-84 months
300
Min. income of $2,000 /month, 3+ months employed
Search thousands of vehicles online, including $0 down options, from dealers across the country and get matched with affordable financing options. Auto loans are also available to those with bad credit, consumer proposals and bankruptcies to help rebuild credit.
LoanConnect Car Loans
$500
9.90% to 46.96%
3-120 months
550
No min. income requirement
Get access to 25+ lenders through LoanConnect's brokerage. Receive pre-approval in as fast as 60 seconds and get your funds in as little as 24 hours.
Canada Auto Finance
$500
4.90%-29.95%
3-96 months
300
Min. income of $1,500 /month, 3+ months employed
Canada Auto Finance is a broker that connects borrowers with partnered local lenders. Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.
Carloans411 Car Loans
$500
1.90% to 19.99%
Up to 72 months
300
Min. income of $1,600 /month, 3+ months employed
Get connected with suitable lenders through CarLoans411. Finance your next car, van or truck with loans available in amounts from $500 to $50,000. Check eligibility for this loan through LoanConnect.
Fairstone Secured Personal Loan
$5,000
19.99% to 23.99%
36-120 months
560
Established credit history and own your home
Fairstone offers secured personal loans up to $50,000.
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Compare up to 4 providers

How to reduce depreciation after you buy

These tips can help ensure your car maintains its value for the long haul. This is especially important if you plan on selling your car or trading it in down the road.

  • Drive safely

    Accidents — especially major ones — can lead to repairs that speed up depreciation. Plus, any accidents or repairs reported to your insurance company will be added to your vehicle’s history report. This can also reduce the value of your car and make it harder to sell.

  • Stay on top of maintenance

    Used car buyers want to purchase a reliable vehicle, not one that’s been neglected or driven almost to the breaking point. Get your car serviced at the manufacturer’s recommended service intervals and keep the receipts. Having a full record of previous maintenance makes your car that much more valuable — and its depreciation that much less costly.

  • Keep the kilometres down

    The more a car is driven, the higher the chance that something may go wrong. By keeping your kilometres as low as possible, you can minimize the effect of depreciation. A maxed-out odometer can have a huge impact on your car’s resale value.

  • Keep it clean

    From regular vacuuming to the liberal use of scented fabric spray, keeping your car clean and fresh is essential to reducing its depreciation. You’ll also help your resale value if you avoid smoking, eating and drinking in your car. Frequent trips to the car wash can also pay off. So can parking in a garage or covered area.

  • Avoid nonstandard modifications

    Thinking of turbocharging your engine or taking up all your trunk space with the most elaborate sound system known to man? It may actually reduce your car’s value and make it less attractive to prospective buyers. Keep nonstandard modifications to the minimum to ensure your car doesn’t depreciate solely because of your personal preferences.

How to reduce depreciation when you sell

Here are two pointers to get the best price when you’re ready to upgrade your car to something new:

  • Sell at the right time

    Gauge the market before selling your car. For example, you’ll probably get less for a convertible if you decide to sell during the winter. And if your car’s manufacturer just updated or discontinued your car model, the resale value could go down.

  • Find a private buyer

    While selling or trading in your vehicle at the dealership is usually the fastest way to get rid of your car, it tends to come with a lower price than if you were to sell privately. Just be prepared for it to take a bit longer — especially if you’re hoping to sell it for as high a price as possible. Check out our tips for selling your car privately here.

Bottom line

By shopping smart and keeping up with maintenance, you can prevent some of the loss caused by depreciation. And if you’re ready to buy, you can lower your costs by comparing car loans and searching for a competitive interest rate.

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