It’s common knowledge that as soon as your hot new ride has left the showroom floor, it has already decreased in value. The effects of depreciation can see your vehicle’s value drop by thousands of dollars in a short amount of time and continue to do so for every year you own it.
Though depreciation is an unavoidable part of buying and owning a car, there are a number of measures you can take to reduce its effect and save money. Here are eight savvy tips to help you delay the inevitable and obtain the highest possible resale price.
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1. Don’t skip car services
Your car is probably the most intricate piece of machinery you own or ever will own. It’s comprised of thousands of parts that all need to be kept in good working order. Regular servicing is essential if you want to maintain the overall health of your vehicle and increase the longevity of the engine. Aim to service your car every 10,000-15,000 kilometres. A car with a history of regular servicing is also much more attractive to prospective buyers.
2. Keep the oil topped up between services
Engine oil helps keep internal parts lubricated and moving freely. It maintains engine performance and prevents overheating in fast spinning parts, removing soot and other contaminants in the process. Not having enough oil can cause the engine to overheat and seize up, resulting in irreversible damage to your car. It’s good to regularly check your oil levels between services to monitor where it’s sitting – you can either check when you’re at home or when you fill up at the petrol station. If you don’t know how, refer to your car owner’s user manual.
3. Keep the interior and exterior clean
Sounds simple enough, but having a clean and pleasant-smelling car gives the impression of a well-maintained vehicle which can attract a higher selling price when it comes to re-selling.
Keep on top of vacuuming and wipe down any hard surfaces with a microfibre towel. You can remove stubborn marks or stains with an upholstery cleaning foam (and a hearty dash of elbow grease). If you have a leather interior, standard leather cleaner or conditioner are good to use since they prevent cracking or peeling over time. Be sure to give the outside of your car a good wash from time to time as well to protect the paint and reduce rusting. Parking it somewhere protected and out of the elements can also help to keep your car looking good as new.
4. Don’t make any personal modifications
Though it may be tempting to pimp your ride, cars are built to specification for a reason. Personal modifications such as lowering the vehicle or replacing the muffler to amplify exhaust sound can significantly reduce the resale value. Modifying your car destroys the integrity of its design and can lead to long-term damage down the track, especially if the change affects the vehicle’s engine or electrical system. It can also narrow down your potential market when it comes to prospective buyers – the next owner may not want smoked tail lights or a giant stereo system installed in their humble Honda Civic.
5. Repair any scratches
It’s important to keep your car’s paint in good nick if you want to retain its value. Scratches and stone chips, no matter how small, can expose bare metal, eventually leading to rust and corrosion. Next time you give the car a wash, go round the bodywork once it’s dry and use a stone-chip pen to repair any marks. It doesn’t hurt to use polish occasionally either since it removes scratches and restores gloss paintwork. Make sure you purchase a good quality car polish and always use two cloths – one to apply and the other to buff. For bigger scrapes and scratches, it may be worth getting them touched up professionally before putting your car on the market.
6. Insure your car with comprehensive insurance
Sometimes, life happens, and it can be reassuring to know you’re covered should any unexpected damage occur. Comprehensive car insurance covers damage to other people’s vehicles as well as your own. You’ll also be covered for fire and theft, along with any other damages listed in your insurance policy. When it comes to finding the right comprehensive car insurance, it pays to shop around. Some insurers will offer extras such as windscreen replacement, which can come in handy when re-selling since a windshield with chips or cracks can greatly reduce the value of your vehicle. If you don’t get another car, some insurers may refund the unused portion of your premium. Remember to update your policy once you’ve sold your car.
7. Be resale savvy
It pays to plan ahead and research your vehicle’s resale value. A number of motoring organisations throughout Australia publish data on car operating and running costs. This can help you identify makes and models most likely to withstand the test of time and maintain their value in the future. Car valuation services also allow you to analyse how much your car will be worth depending on how long you own it.
8. Claim it back on tax
You can claim vehicle depreciation if you earn a taxable income when using your car – for example, if you use your car for Uber. When lodging a depreciation claim, you will need to take into account the cost of the vehicle, the method of depreciation and the effective life of the vehicle. There are a number of tools, such as the ATO’s Depreciation and Capital Allowances tool, which can help you calculate asset-based depreciation and send the results directly through to your tax agent.
Though depreciation is inevitable when it comes to owning a car, a little can go a long way when vehicle maintenance is concerned. Keeping your car clean and regularly serviced can really help to reduce the rate at which depreciation occurs and help make your car a much more attractive option to resale buyers.