We always expect that the value of our assets will increase over time. For that reason, sometimes we assume that our car’s price will also rise. But the scenario is quite the opposite.
Generally, a car’s price decreases 10-20% during the first year and gradually decreases over time. This trend is called depreciation and is true for most cars. A used car usually loses 50-60% of its initial value in just five years. Some antique and vintage cars do, however, increase in value over time.
In this article, I will illustrate the facts of reselling cars and will give you some idea in which scenarios used car’s price depreciates less.
How Long Do Cars Hold Their Value?
Unlike your other assets, if you own or buy a new car from a showroom, it loses its value within a year by 20%. Cars price gradually decreases with time, and as a rule of thumb, it will lose 60% of its market value over five years.
That is why investing in a new car for reselling it is not profitable. Many new buyers think that their cars will hold their value or their price will increase over time which is not the fact.
If you have a general idea about cars, you already know that a second-hand car’s resale value is way below its original market price. There is a term called depreciation which means that used cars gradually lose their worth over time. For that reason buying a car for resale is not practical.
When you buy a new car and drive it off the showroom, the car value decreases instantly. And as I said earlier, it will lose its market price around 20% within a year. According to research, car prices lose 15 to 20% of their original value from 2 to 6 years.
However, not all cars lose their initial value like others. There are many reasons behind it. Although the exceptions are few, it is possible that you own a car like those. In this article, you will find out how to increase your car’s resale value over time. I will give you some tips and tricks to become a master of reselling cars.
Can a Car’s Value Increase Over Time?
It is unlikely to happen, or you can hardly expect that your car’s market price will increase over time. There are some exceptions where the cars defy the law of five, but the possibility is low for you. Generally, the resale value of a car decreases the second you buy it.
If there is a shortage of raw materials, then the price of new cars may increase in your country. This fact mainly depends on the car manufacturer and the supplier of the materials. This is applicable only for new cars and not for your used car.
If you are expecting the price of your used car to increase over time, you will disappoint yourself. The depreciation of a car’s price is a fact, and you cannot deny it under normal circumstances.
In some rare case scenarios, the price of your car will increase or lose the market price a little, but you have to wait for a long time. It is wise to invest in a used car if you are not willing to spend a fortune. Moreover, It will depreciate a little because it is already cheap. Now, it is time to tell you the facts that increase or at least hold the initial worth of a car.
How to Increase Your Car’s Resale Value?
Buying a new car is a bit tricky, and it gets worse if you are buying your first car. There will be times when you need to sell your old car to buy a new one. We always try to get the maximum resale value when we are selling our used cars. If you follow the facts or your car is one of them, there is a high chance you are going to get the best value from your car.
Reputed Manufacturers or Models
If you buy a car from a reputed manufacturer, which is also known for its longevity, then the depreciation of the car will decrease slightly. When a car gets its fame for its reliability, it catches the surprising attention of buyers. But if you want to invest in a car like that, you should research it and look for its user review on the internet.
Nowadays, every car manufacturer promises some exceptional features and reliability of their cars to advertise. You need to choose the right one for you carefully.
Some classic cars have a bold personality and appeal to the present generation, which is missing from today’s cars. Car enthusiasts love to collect this type of car to enrich their collection. As this type of cars are rare now, you can sell your parents’ classic car in the auctions where people bid money to get their desired things. Selling this type of car can give you a few times more money than the actual price.
Limited Edition and Hard to Get
Some manufacturers produce a limited edition car for their fans. Luxurious and sports cars fall under this category. These rare cars are expensive and hard to find because they are made in small numbers. These cars defy the rule of thumb. If you are rich enough to buy this type of car, the resale value decreases slightly compared to others.
Good Condition and Less Ownership
If you maintain your car with proper care and it has only one owner, It will retain its value longer than most used cars. Used cars with high mileage, spotless interior and exterior, and less ownership depreciate slowly over time. But no matter how good you take care of your car, it will fall under depreciation.
To sum up, It is safe to say that most of the used cars fall under depreciation, and the value gradually decreases over time no matter how hard you try. In my opinion, I would advise you to buy a second-hand car after inspecting it.