Car Pricing: Depreciation

Car Pricing: Depreciation

Car depreciation is a decrease in value of a purchased car. There are several reasons for the decrease, such as age, wear and tear and market conditions.

Basically, once a vehicle is purchased, its owner can only resell it for a lower price. The longer a car owner waits to sell their vehicle, the lower the vehicle’s resale value will be. The only exceptions to the rule are rare or classic models, which can be sold for hundreds or even thousands of dollars at an auction. Depreciation is inevitable, which means that no matter what a car owner does, their car will lose value over time.

Cars tend to lose between 15 and 20 per cent of their value each year. For instance, a car that costs $15,000 would be worth about $9,600 after three years. In fact, depreciation comes into effect as soon as the purchased vehicle is driven off the dealer lot. One of the reasons is the fact that the dealer would not buy a vehicle for the same price they sold it for. Instead, they would pay its wholesale price, which is usually thousands of dollars less than the price they offer themselves. This loss also includes the amounts paid to cover taxes and other additional fees.

There are several actions that car buyers can take in order to fight depreciation. Usually cars that have a high demand but low supply have better resale values – as do cars that are in good condition. On top of that, certain brands tend to depreciate less than others.

In a nutshell, the best way to deal with depreciation is to prepare for the worst.

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