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You may have heard the saying that a new car starts to depreciate the moment it is driven off the dealer’s lot – while this sounds like an exaggeration, a US-based insurance site has put the number at a massive 11%. We don’t have the exact figures to account for such ‘immediate depreciation’ for vehicles in Malaysia but annually, it is estimated that a car will lose an average of 10% to 20%.
Now vehicle depreciation is expected to some degree – but did you know that certain factors could actually speed up the process and affect your car’s resale value?
Here are eight things that could influence your vehicle’s resale value for better or for worse in the secondary auto market:
1. Car Colour
Just because you love bright tangerine for your car’s paint job, doesn’t mean potential buyers will too.
Basic colours like white, black, grey and silver, especially metallic variations, tend to sell easier and often for more money. In contrast, flashy and bright shades of green, gold, maroon and purple or other colours that do not fall under the popular spectrum may struggle in the secondary market. Often, it’s the difficulty to sell the vehicle in the first place that prompts the owner to accept a lower offer from a would-be buyer.
2. Make and Model
Depending on the region in which you live, your car’s brand and model can positively or negatively impact the resale price. The reasons for this aren’t necessarily logical as it may simply be a matter of preference or perception. Sometimes though, it is practicality that wins out as certain models are engineered with better utility (e.g. efficient fuel consumption, etc.).
In Malaysia, Asian brands (though not all) tend to fare best, namely Toyota, Perodua and Honda. Middle-range continental cars (European) however, do rather poorly here in the resale market; it could be because certain brands and models consist of more expensive parts that may also be difficult to source.
3. Quality of After Sales Service
When your car is still under warranty, which can be anywhere from three to seven years from its manufacture date, prospective buyers will want to know if its service centre has the chops to take care of your vehicle and if it is supportive enough.
Some centres are rated better than others, so even if it is not your fault how the service centre performs, be sure to review service proficiencies of your car’s brand before buying.
4. Condition of Exteriors and Interiors
Buyers prefer clean-looking interiors for obvious reasons; it indicates the level of care and maintenance that the previous owner supposedly practiced. Note though, that it might be of little bearing on the performance of the car if the blemishes are minor such as small stains and slight runs in the leather or fabric of the seats.
With exteriors, the occurrence of scratches and scrapes may be a bigger problem as it is not only a cosmetic issue but could lead to rusting and damage of the body. Undoubtedly, potential buyers will pay less as they consider their own costs for repairs.
The further your car has travelled, the lower the resale value – this is because a car with more miles is generally thought to have greater wear and tear brought upon it.
Conversely, if a car has lower mileage – it becomes a lot more attractive to potential buyers and might help to keep value even if your car is slightly older.
6. Service Records
When your car is well maintained with service records to prove it, the resale value can be positively affected. But does it matter where you service your car? The short answer is yes. Maintaining your car through dealer service centres or authorised agents can be a draw point to potential buyers.
This is perhaps because buyers can have a trustworthy account of the vehicle’s past and current condition, in addition to proof of regular maintenance. Note though, if the car owner used a widely-reputed private garage, the resale value may not be overly affected.
The age of your car is an important consideration since older cars will generally reduce in value with the exception of collector or classic vehicles. These are able to keep value, reduce at a rather lower rate or even increase, sometimes making it an investment of sorts.
In addition, the age of the car may also affect the financing options available for the buyer. Cars aged between nine and twelve years or older could face potential loan issues, either due to higher interest rates or a smaller margin. Financing may even be impossible to secure with certain banks. If this is the case, you might want to take a look at our personal loan comparison page for help financing a second-hand vehicle purchase.
Some modifications add value, while others detract. Tinting, leather seats and security features are a big plus point as it improves the car and the driving experience as a whole.
On the other hand, massive rear wings, lowering with SUVs, flamboyant body kits and neon lights often bring a negative impact instead. Typically, if any modification makes the car unattractive, voids warranty or causes the car to become more tedious to manoeuvre, resale value expectedly drops.
Keep in mind that resale value is not the only thing to look at when buying a car – safety, efficient fuel consumption and cost should factor into your decision first. However, it’s better to know about the things that can affect the resale value before you plan to sell your car – perhaps even before buying one. This way you can avoid the pitfalls of losing money when it comes time to sell or trade in your vehicle and better yet, add to its value wherever possible.
Cover image from Loanstreet
*Article source: Loanstreet