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Maximising Your Car’s Resale Value: Top Tips to Reduce Depreciation

Last updated on March 18th, 2024
  Written by 
Adrian Edlington
Adrian Edlington is PR & Communications Manager at Savvy. With a keen interest in personal finance, car loans, the mortgage industry, cost of living pressures, electric vehicles and renewable technology, Adrian's research includes conducting primary data surveys and analysis of up-to-the-minute secondary Australian data sources. His work on behalf of Savvy has been featured on ABC.net.au The Conversation, the Sydney Morning Herald, AFR, News.com.au, The Age, Herald Sun, Adelaide Now, SBS On The Money, 7News, Car Expert, Which Car, Drive.com.au and more. In his spare time, Adrian enjoys mountain biking and business podcasts.
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   Reviewed by 
Bill Tsouvalas

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Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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What is depreciation and how does it work?

Unlike fine wine, cars don't get better with age. The moment you drive your shiny new car off the lot, it starts losing value. This phenomenon, known as depreciation, reflects the decrease in a car's market worth over time. In other words, it's the difference between how much you paid for the car and how much money you can get for it when you sell it later on. Several key factors influence how quickly your car depreciates:

  • Age: as your car ages, newer models with the latest technology and features hit the market, making yours seem less appealing. Generally, cars depreciate the most in their first few years of ownership. New cars can lose up to 30% of their value in the first year, with value decreasing further in subsequent years.
  • Mileage: high mileage is a red flag for potential buyers, suggesting increased wear and tear on the engine, transmission and other components. Aim for moderate mileage that reflects responsible use of the vehicle. The average annual mileage for vehicles in Australia is around 12,000 kilometres.
  • Make and model: some brands and models depreciate faster than others, so it’s worth doing your research to find out which cars have the best resale value in Australia.
  • Condition: the overall condition of your car plays a crucial role in resale value. A car that has been meticulously maintained, kept accident-free and boasts a clean interior will fetch a significantly higher price than a neglected one.

How can I slow down the depreciation of my car?

While all cars will depreciate over time, there are ways to slow the process to help you get a better deal when you decide to sell. Here are some proactive strategies to maximise your car’s resale value:

Choose your car wisely

The type of car you choose significantly impacts its depreciation rate. Don't get swept away by flashy features: generally, luxury cars and vehicles with high maintenance costs depreciate faster than more affordable, reliable models. Research the depreciation rates of different makes and models before making a purchase. Additionally, consider factors such as fuel efficiency, reliability and popularity in the used car market, as well as other features such as car colour and additions such as sunroofs and safety technology, which can all have an impact.

Don’t ignore the maintenance

Routine maintenance is crucial for preserving your car's value. Follow the manufacturer's recommended maintenance schedule for services like oil changes, tyre rotations and brake inspections. Addressing minor issues promptly can prevent them from escalating into more significant problems that could affect resale value. Keep detailed records of all maintenance and repairs, which can reassure buyers and demonstrate that the car has been well cared for.

Keep it clean

Looking after your car's exterior and interior can help maintain its appearance and resale value. Food crumbs, spilled drinks and pet hair are not endearing qualities. Keep a clean and tidy interior by vacuuming regularly and wiping down surfaces, and use seat covers and floor mats to prevent stains and wear on upholstery and carpets. Meanwhile, regularly washing and waxing the exterior can prevent paint damage and rust and keep the vehicle looking fresh. Whenever possible, park your car in a garage or under shade to minimise sun damage and preserve its appearance.

Avoid excess modifications

Extensive customisations like loud exhaust systems, flashy rims or body kits can be a major turn-off for potential buyers who prefer a stock car. Stick to minor upgrades that enhance functionality without drastically altering the car's appearance. Remember, the goal is to make the car more desirable to a wider range of buyers, not just those who share your specific taste in modifications.

Drive defensively

Aggressive driving habits not only put yourself and others at risk but also contribute to increased wear and tear on your car. Practise safe and defensive driving techniques like smooth acceleration, maintaining a safe following distance and avoiding harsh braking. This not only improves fuel efficiency but also minimises the potential for accidents, which significantly impact resale value.

How can I get the best resale price for my car?

When it comes time to sell, there are some additional tactics that can increase the amount you get for your car:

  • Sell privately: while selling your car to a dealership is convenient, you'll typically get a lower price than selling it privately. Selling privately requires more effort in terms of advertising and negotiating, but the potential payoff can be significant. Online car selling platforms and classifieds can be effective tools for reaching a wider audience of potential buyers.
  • Timing is everything: just like the stock market, there’s a season for selling cars. Generally, spring and summer tend to be better times to sell due to increased buyer activity. Avoid selling your car at the end of the financial year when dealerships are trying to meet sales quotas and might be less willing to offer top dollar for your trade-in.
  • Know your market: research similar cars for sale in your area to understand the current market value. Price your car competitively to attract serious buyers without leaving money on the table. Use online resources and car valuation tools to get a realistic estimate of your car's worth.
  • Be honest and upfront: disclose any pre-existing conditions or repairs your car has undergone in a transparent manner. While you don't want to scare away buyers, honesty builds trust and avoids potential headaches down the road.
  • Hold onto the paper trail: don't underestimate the power of documentation. Keep all service records, receipts for repairs and parts replacements, and ownership documents meticulously organised. This transparency builds trust with potential buyers and demonstrates your commitment to proper car maintenance. These records can also be helpful in justifying your asking price when selling the car.

Depreciation is inevitable, but by following these tips, you can significantly slow down the process and get the most money out of your car when it's time to sell. Remember, a well-maintained, reliable car with a clean history and desirable features will always attract more interest and fetch a higher price.

If you have your eyes on a new car, turn to Savvy for your financing needs. Our expert team can search and compare offers from dozens of lenders to help you find a car loan that suits your needs and budget. Get started with Savvy today!

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