Depreciation is one of the biggest costs of car ownership \u2014 especially if you buy a new car. In fact, most new cars lose 20% of their value the second they\u2019re driven off the lot. Though unavoidable, there are ways you can limit this financial loss \u2014 from buying a car that maintains its value to keeping up with maintenance. Keep reading to learn 12 tips for reducing your car\u2019s depreciation.<\/p>
Car depreciation is the rate that a vehicle\u2019s value goes down over time. Several factors contribute to depreciation, like wear and tear on the vehicle over time and outdated features. For example, a vehicle that\u2019s worth $27,705 when it\u2019s brand new might only be worth $9,625 after five years. Keep in mind that every vehicle depreciates at a different rate, so you\u2019ll need to do some research to find out how much your car is worth. Read our full guide on how to figure out your car\u2019s value here<\/a> to learn more.<\/p> 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.<\/p> 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.<\/p> This will help you get a better deal when you go to sell or trade in your car down the road.<\/p><\/li> 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<\/a> and Auto Trader Canada<\/a> 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.<\/p><\/li> 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 dream car. Keep this in mind if you\u2019re ever toying with the idea of buying a vehicle \u2014 or painting the one you currently have \u2014 a bold color.<\/p><\/li> Buying a slightly used vehicle, even if it\u2019s just a year old, can help you avoid some of the costs of depreciation. That\u2019s because a new vehicle can lose up to 30% of its value by the end of the first year after you buy it. Buying a slightly used car means that you let the previous owner soak up most of those depreciation costs, which reduces the amount you lose in value.<\/p> Leasing also includes the cost of depreciation, and you may be able to get a good deal if the car\u2019s 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.<\/p><\/li> 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 \u2014 and reduce depreciation.<\/p><\/li><\/ol>5 tips to reduce depreciation before you buy<\/h3>
Choose the right make and model<\/h4>
Research previous resale values<\/h4>
Pick a standard color<\/h4>
Buy used or lease<\/h4>
Opt for a car that comes with a transferable warranty<\/h4>
Ready to buy? Compare car loan lenders<\/h3>