Buying and Selling Tips/Guides

Car Depreciation: What is it all about?

The moment you drive your car off the lot, your car may depreciate by as much as 10%. This depreciation will continue every year by about 10-20%. After five years, your car might be worth only 40% of the price you paid for it! So what is car depreciation, and why does it happen?

Why do cars depreciate?

Wear and tear

Dirty car

When you use any item, be it a door, a book, or a car, all of them will suffer wear and tear. The more moving parts a particular item has, the more wear and tear it takes. A car has hundreds of moving parts, all of which suffer from wear and tear every time you use it. The more it is used, the more likely a part is worn down closer to its breaking point. These parts need a thorough inspection to determine if they are still viable or need replacing. This is why a car’s mileage is one of the ways to quickly determine a car’s value.

Newer models

Another reason for the depreciation of a car’s value is the arrival of newer, improved car models. New car models or variants of older models are launched on almost a yearly basis. That means as your car ages, newer, better cars with more features are introduced to the market, making your car less attractive.


The word ‘used’ often carries a negative connotation. Be it clothes or cars, people tend to prefer new. So the moment you drive your new car from the dealer, you are in fact driving home a used car.

How to reduce car depreciation

Now that we know how depreciation works, let us look at a few ways to reduce it.

Regular Maintenance

The easiest way to maintain your car’s value is maintenance. This reduces the aforementioned wear and tear with new parts replacing older parts and therefore depreciation. Keep organised records of your maintenance schedules to prove that you take good care of your car. If you can’t get to a mechanic, don’t worry. Here are some simple tips to maintain your car during lockdown.

Sell before the year ends

One of the first things people look at when buying a car is the year. It does not matter if a car was first bought in January 2019 or December 2019, the car will be a 2019 car. So with this in mind, sell your car before the year ends. If you sell your 2019 car in December 2021, you will be selling a 2-year-old car. Sell it in January 2022 however, and you will be selling a 3-year-old car.

For more tips on improving your car’s resale value, check this article out!

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