You’ve probably heard many people say that your car value depreciates as soon as you drive it out of the lot. Well, it’s true.
According to surveys, a car’s value decreases around 20% to 30% by the end of the first year of its purchase. From years 2-6, the depreciation ranges from 15% to 18% per year. In five years, a car loses roughly around 60% or more of its original value.
There’s no reason to worry, however, as not all vehicles depreciate at the same rate. Meaning certain makes or models can hold their value better than others. Depreciation rates may also vary over time.
So, what can a car owner do to manage depreciation? Here are a couple of strategies that we at J.E. Insurance Associates DBA Amco Insurance — a professional provider of auto insurance in Hialeah, Florida — find are very effective in terms of managing the costs of car depreciation.
- Buying Used
A brand-new car will depreciate the most due to the steep “first-year drop.” Purchasing a 1-year-old car helps you avoid this first hit from depreciation and saves you a great amount of money.
- Knowing the Resale Value
There are tools such as Kelley Blue Book’s five-year cost to own or Edmunds.com’s true cost to own, which you can use to determine how much specific models typically depreciate.
- Maintaining Your Vehicle and Keeping Records
Regularly servicing your car, getting it the right insurance services in Hialeah, Florida, and keeping all those records can prevent your car from depreciating as quickly as a haphazardly maintained car of the same model and year.
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