What’s My Car Worth - Depreciation

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Everyone knows that when you buy a new car, it loses value over time. A one-year old car isn't worth the same amount as a brand new one. Depreciation can be explained quite simply as the difference between the car resale value when you trade it in or sell it yourself, and the amount you paid for it when you bought it.

It's understandable and not uncommon for owners to imagine their trade-in is worth more than it is, as they often base their estimate on how much they paid for it and how much they think it should be worth. Vehicle depreciation is a fact of life that can't really be avoided, but there are some things that can be done to keep it to a minimum, and there are a number of ways this can be achieved.

One of the best ways to reduce the amount of depreciation is to buy the right vehicle in the first place, but the way you look after your vehicle is also vitally important as poor condition can have a significant impact on its value. There are a lot of factors that determine the resale value of a vehicle, including the make, model, age, condition, amount of kilometres on the odometer, and the service history. Buying a vehicle that is proven to hold its value better than others is a good place to start, but you have to do a little homework as current trends and even the economy can have an effect on what's hot and what's not.

For example, it's hard to ignore the fact that trucks and SUVs are definitely the flavour of the month right now. Not only are they the hottest-sellers in the new market, it's the same story when it comes to pre-owned SUVs models as well. That means their value is holding up especially well at the moment, so we know they will depreciate less than many cars.

A good place to start researching vehicles is the Canadian Black Book, where you can look up your car's current value and even look for a vehicle's projected future value. Another good source is the annual Edmunds.com Best Retained Value Awards, which names the vehicles with highest projected residual values after five years based on their average True Market Value price when sold new. Other equally trustworthy resources are the KBB.com and NADA lists that look at predicted residual values of vehicles after three and five years of typical ownership.