7 Things That Affect Resale Value
If you’ve purchased a new car you are aware of the impact that driving it off the lot has on your resale value. Here are the things to be mindful of if you want to resell your car.
If you’ve ever purchased a new car you are probably well aware of the impact that driving it off the lot has on your resale value. A new car could lose as much as 19% the moment it leaves the parking lot, which is a big chunk of cash. That’s why many personal finance experts often recommend looking to the used market for a car but you should still be mindful of resale value.
Be aware of cars that depreciate more than others before you set out to buy. This article from Edmunds describes a good practice of buying a car in its second, third or fourth years, because in the first year a car can lose about $7,000 but over the next three years combined the car won't lose that much value, thus saving you a lot of money.
Here are seven things that can impact the resale value of a car:
1.Brand
In today’s market, brand matters not only because of reliability and design, but also because of perception. Toyota, Honda and Subaru have the highest brand residual values in the economy car arena. Land Rover, Audi and Lexus have the highest in the luxury, or "premium" category, according to ALG, a residual value forecasting company.
2. Mileage
The lower the mileage the better the car… sort of. There are lots of things that can make buying a low mileage car the wrong thing to do. For more on this check out our story on whether it’s better to buy an older car with less miles, or a newer car with more miles.
3. Wear and Tear
This is a pretty obvious point, but the condition of the car has a big impact on resale. If it smells bad, is messy, is covered in animal hair or has ripped up carpeting, the resale value will tank. If the outside is scratched, dented and peeling, the same result applies.
4. Transmission: Manual vs. Automatic
While most enthusiasts will tell you that it’s far better to “row your own,” (i.e have a manual transmission car), the (sad) truth is that the majority of people who purchase cars would much rather have an automatic transmission instead. Most people nowadays don’t even know how to drive a manual transmission anyway, so automatics are far more in demand.
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5. Color
Love pea green? Well, you’re in the minority. Most people who purchase cars go for traditional colors like black, grey, white, and red. Depending on the model you’re looking at colors can make or break a deal.
6. Mechanical condition
This should go without saying. A car with a good mechanical history and service records is worth far more than one without. No questions asked. Another aspect of mechanical condition is the title status, as a "salvage" title may indicate frame damage.
7. Upgrades
The standard upgrades like tech packages and premium options can cost a pretty penny and in some cases demand better resale value. Things like navigation are almost always desirable, whereas if you have the latest and greatest aftermarket stereo installed, it likely will not do much for your car's resale value. Drastically changing your car from stock specs can have a negative impact on your car's resale value, however if you find the right buyer it could help.
The Instamotor TeamNot your typical used car salesman. Our team is here to provide honest and transparent advice about car buying and selling.
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