How to Estimate Car Depreciation
There is nothing quite like driving home in a new car. You have finally saved the money, picked out your perfect vehicle and it is all yours. You have the features and technology you want and that wonderful new car smell. It is great to know you worked for your new car, and it is satisfying to buy a car that no one else has owned yet.
There is one downside of a new car, though, and that is a new car can depreciate quickly. However, if you do your research, you can choose a car that will keep its value for the long haul.
Check out the tips below to estimate how your new car will depreciate, so you can be aware of your car’s value.
Check Prices for Older Models
If you are looking to buy a new SUV, you will want to check the price of the specific brand and model you are looking to purchase. Then, you will want to look at the price of that specific model in used cars.
Check to see how much it costs for a 5 year old model, a 10 year old model and so on. This will give you an estimate of how much you would be able to get for your car if you were to sell it or trade it in in a few years.
Research Cost of Ownership Statistics
Buying a car is going to cost you money, but there is a significant cost to owning a car as well. We are so accustomed to filling up our gas tanks and changing our oil that we don’t think of these as extra money we spend on our vehicles, but they are.
It is important to know how much it costs to own your vehicle because that can tell you whether or not it is wise to keep driving your current vehicle or buy a new one. As far as cost of ownership, you will want to take into account factors such as car maintenance, car insurance, licensing and registration fees and fuel. Once you know how much money you are spending on your car per year, you can better understand the value of your vehicle.
Estimate the Number of Miles You’ll Drive Each Year
The number of miles has a big impact on the depreciation of a vehicle. The more miles you drive, the more wear and tear on the vehicle and the quicker it loses its value. The average car is driven about 12,000 miles per year, but you won’t want to just assume you will drive this amount. Instead, you should look closer at your specific driving habits.
You will want to come up with a good estimate of how much you will be driving each year to help you understand how quickly your new car will depreciate. To do this, you will want to take into account what you use your vehicle for each day. If you simply use it for a short commute to work at driving it around town, you may not hit 12,000 miles in a year. If you have a longer commute or if you often take long trips, you may have more than 12,000 miles, so you will want to customize an estimate to your lifestyle.
If you do some research online into used car prices, cost of ownership statistics and the number of miles you will drive a year, you can get a good estimate of how quickly your car will depreciate. The depreciation of your car is something important to consider when you are determining the true value of a new car.