Some assets, such as your home, appreciate over time. Other assets, including your car, lose value. In fact, Edmunds.com estimates a new car loses about 10% of its value the moment you drive it off the lot. After five years, the car is only worth about 40% of the dealership price. So, what can you do to help preserve the value of your car? Read on to find out!
The Used-Car Sweet Spot
Car values take the biggest hit during their first year, when vehicles consistently drop around 20% of their value. However—and this is where the savvy buyer takes note—during the next three years combined, cars tend to lose less value than the first year.
Buying a car in its second or third year and owning it for only two to three years can save you a lot of money—especially if you maintain it well. Whether you plan to sell, trade, or just enjoy your car as long as possible, here are some tips for maintaining value.
Watch the mileage. This may seem obvious, but makes a big difference. Low mileage extends the life of your car and optimizes Blue Book value. Be efficient in handling weekly errands. Not only can you save yourself trips by planning effectively and consolidating, but you can keep your car mileage much lower. Carpool, bike, or walk when possible. Consider an inexpensive rental car for long road trips. If you’re planning to sell your car, racking up excessive miles on your own car may prove much more costly than a short-term car rental. Keeping your tires optimally inflated can also lower your gas mileage.
Clean. Don’t treat your car like a cheap diner. Avoid eating in your car. Definitely don’t smoke in it. Bad smells and stains can ruin the interior of your car, and both the interior and exterior condition play a major role in maintaining value. Have your vehicle detailed inside and out on a regular basis. Wash regularly, including undercarriage washes to flush out salt if you live in an area with rough winters. Salt can lead to erosion and rust.
Pristine. Have your car undercoated. Regularly protect the paint with a coat of wax, and park your vehicle indoors and out of the elements when possible. Excessive sun can fade the outer surfaces of your car, including trim. Over time, regular sun exposure can also crack dashboards. Applying a UV protectant can extend the life of the plastic and vinyl. When away from home, try to park in the shade. Consider getting a sun shield for the front window to deflect those UV rays. Invest in sturdy seat covers to protect the leather or cloth surfaces—especially if you have children or pets.
Well maintained. Have your car serviced on a regular basis. Change the oil, fluids, and filters regularly, and rotate your tires. Keep all maintenance and repair records. Routine car care will help you nip problems in the bud and avoid unnecessary repairs. It will also reassure a potential buyer that your car was well cared for, and is in good order. Some buyers are willing to pay more with proof of regular maintenance. If your car’s plastic headlight lenses start looking aged or yellow, they can be polished by most auto dealers.
Neutral and fuel efficient. Whether buying a new or used car, fuel-efficient cars in neutral colors are more popular. Hedge your resale bet by purchasing a popular make and color that gets low gas mileage. To learn which vehicles typically hold more value than others over time, check out the Used Car Information Center at NADAguides.com.
Avoid dings and dents. Drive carefully. Steer clear of ruts and bad roads. Try to park well away from other vehicles—especially those parked too close to or overlapping a line. Open doors slowly and carefully. If you have a truck, consider a bed liner. Be careful curbing your vehicle. If your car has alloy wheels, and you get too close to the curb, the edges of the wheels can get scratched or bent. If damage occurs, professional wheel repair shops can usually refinish the wheels for much less than the replacement cost.
Spend Wisely on Extras. Adding expensive equipment won’t necessarily increase your car’s value. Remember: you may not recoup the costs of after-market improvements. Not all used-car buyers have similar tastes. Not all will pay extra for the expensive stereo equipment you’re considering. Opt for things that are practical and widely used, such as iPod connectors.