Depreciation is the single most expensive cost of owning a vehicle. Your vehicle depreciates the minute you drive it off the lot, and steadily decreases in value each year. As a quick rule of thumb, a car will lose between 15 and 20 percent of its value each year. After three years of a car’s life, depending on the vehicle, it may have depreciated by as much as half of its original value.
Here are some tips to get the most out money out of your vehicle:
1.) Shop with resale in mind – If you will keep your vehicle for less than five years, resale value should be an important consideration. Air conditioning, automatic transmission, leather seats, a moonroof and rear-entertainment systems can positively impact resale value. Also, pick a conservative color. Black, white and gray are the safest color choices. Interior colors should be conservative as well; unique embroidered leather or special trim will not add to the resale value.
2.) Maintain you vehicle – The overall condition of your vehicle matters most to used-car shoppers. Any collision history – even if the damage is repaired – decreases your resale value. Fix dents, scratches and dings immediately before they become more serious. Follow the proper maintenance schedule and keep all of the receipts. Complete any necessary recalls; they are free, and not having them performed could compromise the safety and operation of the vehicle. Most important, keep the mileage low. High mileage will hurt trade-in values and low mileage cars will sell for a premium. According to the U.S. Department of Transportation, annual mileage of roughly 13,500 a year is considered average. If you drive more than that it will detract from your car’s value; if you drive less than the average, your car is likely to depreciate at a slower rate.
- Excellent condition means there are no mechanical defects and the vehicle passes all necessary inspections. Paint, body and wheels have a minimum of minor surface scratching with a high gloss finish and shine. The vehicle’s interior has minimal soiling and wear, and all equipment is in working order.
- Good condition means that the interior has minimal soiling and wear, and all of the equipment is in complete working order. The vehicle will need minimal reconditioning to be made ready for resale.
- A vehicle in average condition is mechanically sound but may require some repairs or servicing to pass necessary inspections. The paint, body and wheel surfaces may have moderate imperfections, but the finish and shine can be improved with restorative repair. A vehicle in average condition will need a fair degree of reconditioning to be made ready for resale.
- In the “rough” category, vehicles have significant mechanical defects and need substantial work in order to restore reasonable running condition. Paint, body and wheel surfaces have considerable damage, potentially including dull or faded paint, dents, frame damage or rust. The interior has above average wear, and some equipment may not be working properly. Often there are heavy stains on the headliner, carpet and upholstery. These vehicles will need substantial reconditioning and repair to be made ready for resale, and some issues may be difficult to restore.
4.) Do your homework – When it’s time to sell, focus on the condition of your vehicle. Use online sites to help you assess the value of your vehicle. Price your car higher if it’s still under warranty or has an extended warranty that is transferable. Recently completing major maintenance – such as a 60,000-mile service – adds value. You’ll also benefit if you have recently purchased a new set of tires or installed new brakes. Having the documentation about repairs can help eliminate any confusion. Have your car professionally detailed to remove stains and odors.
5.) Pick the best sales option –
- Trade it in – A trade-in typically generates value towards the cost of a new vehicle, in some states there is the added benefit of reducing taxes, as you pay tax only on the difference between the cost of the new vehicle and the trade-in value. A trade-in is very convenient, and reduces the amount of time invested in disposing of the vehicle. You can sell your vehicle to a dealer directly without purchasing another vehicle. This helps you separate and simplify the negotiations on the price of a new car from the discussion of your trade-in value.
- Do it yourself – Selling the vehicle yourself is widely believed to be the most lucrative method of disposing of a vehicle, but that assumption has many caveats. You might need a significant amount of time to sell the vehicle, or be forced to sell it at a reduced price. There also are costs to advertise the vehicle, time involved in the sales process, and the potential need to have the vehicle inspected by a mechanic in order to attract buyers.
- Donation – There are many organizations that will take your vehicle and either use the vehicle or the proceeds from its sale for charity. You benefit from a tax deduction, and you are able to dispose of the vehicle quickly. It is important to ensure that the charity you are working with is an official 501(c) (3) and that they provide you with the required tax paperwork.
Once you have determined your sales method, check the calendar to plan your transaction. Vehicle sales are the highest in March and April, making it the best time to sell your vehicle. Selling in September or October, however, would be more difficult because of a glut of used-car inventory caused when fleet companies dispose of older vehicles in preparation for newer models.
Once you sell your old vehicle, AAA can help you find a new one. Consumers can save time, hassle and avoid the haggling with AAA’s Auto Buying Service. There are thousands of new and used cars listed online in the Certified Dealer Network. Now, consumers can research a car and print out the “Certified Dealer Report” complete with Guaranteed Savings Certificate and the dealer’s and representative’s names. The dealer contacts the consumer to arrange a test drive. If you love it, buy it — without the worry or pressure.
About The Auto Club Group
The Auto Club Group (ACG) is the second largest AAA club in North America. ACG and its affiliates provide membership, travel, insurance and financial services offerings to approximately 9 million members across eleven states and two U.S. territories including Florida, Georgia, Iowa, Michigan, Nebraska, North Dakota, Tennessee, Wisconsin, Puerto Rico and the U.S. Virgin Islands; most of Illinois and Minnesota; and a portion of Indiana. ACG belongs to the national AAA federation with more than 55 million members in the United States and Canada and whose mission includes protecting and advancing freedom of mobility and improving traffic safety.