USED CAR VALUE DEPRECIATION
You can expect the value of your new car to depreciate by approximately 20 percent during its first year. There are a variety of reasons why cars devalue. The value of a new car is based on the fact that it is new. Once you drive the car off the lot, the car loses that distinction along with its perceived value.
What Is Depreciation?
Automobile depreciation can be seen from two vantage points. There is the way that the IRS views depreciation, and then there is real world depreciation. From the standpoint of the IRS, straight-line depreciation allows you to write off 20 percent of the value of the car each year.
Real world depreciation is not dependent on what the IRS says. It is what determines how much you can resell your used car for. Cars depreciate differently. However, you can expect that during the first year, your car will lose around 20 percent of its value. It will lose an additional 15 percent each year. After 10 years, your car is worth approximately 10 percent of what you originally paid for it.
A $30,000 car will be worth $24,000 after year one. By year two, it will be worth $20,400. By year 10, it will be worth $3,000.
Is There a Way to Get Cash for Cars That Have Depreciated?
There is a thriving used car market. One of the biggest metrics used in determining a person’s ability to get cash for cars that are not new is mileage. Mileage impacts the way buyers perceive vehicles, regardless of the condition that the vehicle is actually in. A buyer may be willing to pay more money for an older vehicle with fewer miles than they will for a new vehicle with more miles.
Less Than 30,000 Miles
As mentioned, a new car is going to lose the largest percentage of its value during the first year of ownership. This loss continues until the vehicle’s warranty wears out, which is around year three or 36,000 miles, whatever happens first.
If your goal is to always have the newest vehicle, it’s recommended that you sell or trade in your vehicle with less than 30,000 miles. This gives you the best chance of getting a buyer and getting more back for your car than you will at any other time.
Between 30,000 to 60,000 Miles
At this point, the car is going to need to be serviced and likely some minor repair issues are going to surface. Still, if you have purchased a car from a reputable manufacturer, there should not be expensive repairs needed. Depending on usage, a car with around 60,000 miles has been on the road for around five years. You will still get some money out of it, but not as much as if you had sold the car earlier. Additionally, you will not have gotten the value out of the car you would have if you held onto it for a little bit longer.
Between 60,000 to 100,000 Miles
At this mileage, you have been able to get a lot out of your motor, and it’s probably a good time to sell. You have likely had to make a few expensive repairs, but if you have serviced the vehicle regularly, it is unlikely that it’s just going to give up on you. At this point the car is paid off, and you have gotten out of it what you have put into it. You will be able to sell the vehicle and get enough money to use as a down payment on a newer vehicle.
Once a car breaks the 100,000 mile mark, the car is perceived as being less desirable. It doesn’t matter how well the vehicle runs, people are afraid that at any moment the car could break down. You may do better looking for a place that offers cash for junk cars than trying to sell the vehicle out right, depending on its condition.
How to Get the Most Money When Selling Your Used Car
When you sell your used car, you want to get the best deal possible. Doing this can be a chore, but it can be financially worth it in the end.
1. Repair Your Car to Be Sold: Make your used car look as good as possible. If there are minor dents and scratches, have them professionally prepared. Have the car professionally cleaned and detailed to bring out as much of its original luster as possible. Make sure your vehicle is mechanically sound by addressing the obvious problems that are within your budget. Have repair receipts available for potential buyers.
2. Know the Value of Your Vehicle: There are number of resources available online that allow you to know the evaluation of your vehicle. These include Kelly Blue Book and NADAGuides. Factors to consider during this process are your car’s mileage, condition, equipment, and value in the region. If you are going to sell your car to a dealer, take note of the trade in value.
3. Talk to the Local Dealerships: In some circumstances, you will make more money if you sell your vehicle to a private buyer. But that carries a lot of risk. The dealership may be willing to negotiate with you if it’s a newer model vehicle in top condition. However, if it’s an older high mileage vehicle that needs a lot of work and that’s barely running, you may be better dealing with companies that offer cash for junk cars.
4. Show the Car in a Secure and Confident Way: Both car buyers and sellers tend to be nervous. Buyers are nervous that they are getting ripped off. They will feel more comfortable if the car is shown in an open location that is secure. Be honest and upfront about any issues that the vehicle has. At the same time, show your car with confidence. If you know how much your car is worth, don’t except a low ball price.
Benefits of Working with Companies Experienced in Buying Used Cars
Dealerships can be difficult to negotiate with, and private buyers may not be willing to pay you what your car is worth. There is a benefit that comes from working with companies like RCO Cash for Cars. Their experience is buying cars throughout all 50 states. They have been doing this since 2005 and offer their clients top dollar.
Since this is their business, they focus on treating people with integrity, dignity, and respect. They offer their clients fair quotes based on current market conditions. As a company that is licensed and bonded, they give you the peace of mind that comes from knowing that when you sell your car, you are dealing with a trusted company.
One of the reasons why people like this option is because it’s hassle free. They are treated with the same dignity whether they are trying to sell a new car or if they are looking for cash for junk cars. There is even the option to sell crashed newer model cars that do not have insurance. This option saves time and hassle, helping people get the money they need for their cars today.
Buying and selling a used car can be stressful. However, if you take the time to learn about depreciation and how it affects your vehicle, determine at what mileage you want to sell your vehicle, take steps to prepare yourself and your car for the sale, and work with experienced professionals, the car buying and selling process can be made more enjoyable.