“Car depreciation” is a term that car owners are familiar with, especially when buying or selling a car. It refers to the amount of value your car loses over the 10-year period while on the roads, and the remaining value would then become your ‘scrap’ value. Although the reality of car depreciation sounds unfortunate and tough, there are certain factors that affect car value and understanding the calculations can help leading up to resale. Read on to better understand at what mileage your car loses value and what you can do to help lessen the loss.
As a key factor in car valuation, a higher mileage would translate to a lower value, and vice versa. Drivers usually start thinking of selling their cars around 100,000 miles, but to make things easier for understanding, the mileage will be grouped into 4 categories.
1. 0 to 30,000 miles
New cars experience the greatest drop in value within the first year and have already begun losing value once it was driven off the lot on purchase. The value continues to drop after the first year until warranties end, which is around 36,000 miles or the third year of ownership.
With low mileage covered and the car relatively good as new, scraping the car can fetch you a pretty decent deal. However, selling your car every two to three years could incur higher costs than keeping true to your car for 10 years and getting little value out of it at the end.
If you are looking to sell off your car in exchange for a most up-to-date model rather than seeking to scrap it at a “worth-it” value, then doing so would be logical. Else, we would recommend you to stick to your companion car for a while more.
2. 30,000 to 60,000 miles
At the current juncture of miles over 30,000, the rate of depreciation would be at a much slower one as compared to the first and early years.
The 60,000 miles would probably mark the fifth year of car ownership and selling your car before this point would be a good option if you intend to save on repairs. Scraping your car at this point will yield a fair bit of money, where you could even obtain an upgrade of the model.
3. 60,000 to 100,000 miles
With proper care and maintenance, or expensive repairs, for your car, keeping your car running over 60,000 miles would not be a challenge. Practical drivers who utilise the car to its best can look at new car purchases at this point if they prefer to freshen things up!
4. 100,000 miles & above
Perceived as less desirable, cars with mileage of 100,000 and above, experience a significant final drop in value at this mark. Although the car may function just fine, the value is significantly lowered because repairs would be costly. Car buyers online may even filter out cars with such mileage, which spells trouble for car owners who are looking to scrap their 100,000 miled cars.
All that said, you may be worrying more about your car which depreciates with your usage. However, as logical as it sounds, reducing your mileage can help to soften the blow of depreciation. On top of that, sending your car for periodic repair and maintenance can be very beneficial. Personal car care such as keeping the interior clean should also be done as it will help elevate the look and feel. If you are unsure of how to best upkeep your car, you can also refer to your car owner’s manual.
(Related Story: Household Products You Never Knew Could Be Handy For Your Car)
Other factors such as the car’s trims, condition, age and service history also contribute to determining the value of your car. Car depreciation is inevitable but as we embrace the harsh reality, we can be mindful of our usage and care in order to have the car maintained in top notch condition, which will be advantageous in the long-term.