Unless they’re collectors’ items, all cars drop in price over time.
A new car’s value effectively plummets by at least 20% – the amount of VAT paid – as soon as your drive it off the forecourt. Inevitably, wear and tear and mileage also take their toll.
But there are things you can do during ownership, in the run-up to selling and when negotiating with buyers to help lessen the impact of depreciation – and make sure you get the maximum resale value for your car.
What is car depreciation?
Depreciation is the difference between the value of a car when you buy it and when you sell it.
Most cars will lose around 50% of their value during the first three years of ownership, but the make, model, age and mileage of a vehicle will be the main ‘features’ that affect its price.
The good news is there are a few steps you can take to add to your motor’s desirability and the amount it’ll fetch when you sell it.
How to keep a full service history
A car with a full service history will be worth more than one without. And while this may sound obvious, tootle.co.uk, an online platform for helping customers find the best offer for their car, found 28% of respondents didn’t realise this.
Cars with no service history can sell for a whopping 20% less, so stick to these golden rules:
- Get your car serviced every year, or in line with manufacturer’s guidelines (check your service book or the car’s computer system).
- Keep a record of the service, otherwise your history will only be ‘partial’. Get your service book stamped by the mechanic and keep the invoice recording what work has been done.
- If your car is still under the manufacturer’s warranty, get the service done at a main dealer. This might be slightly more expensive, but a “full franchise history” adds value when you’re selling a newer car.
Getting your car serviced regularly doesn’t just support its resale value, it will reduce the likelihood of expensive mechanical problems during your ownership. Make sure your MOT is up to date too – this will give buyers additional confidence that the car is problem-free.
How to keep it in good condition
A used car is never going to be in mint condition. But the better nick it’s in, the more attractive it will be to buyers. So:
- Clean the car inside and out before trying to sell. A neat and tidy vehicle gives a much better impression than a dirty, scruffy one. An unclean car can give buyers a sense that it hasn’t been properly cared for.
- Wash your car regularly. Certain types of ‘dirt’, such as tree sap and bird droppings, can permanently damage the paintwork if they are left for too long.
- Repair any scrapes or dents in the bodywork sooner rather than later. Exposed metal could start to rust if it’s left too long, especially in the winter, when wet weather and road salt can accelerate the process. A touch-up pen can potentially be enough to seal small chips. You can find the correct paint code for your car on the build sticker under the bonnet or under the carpet in your boot. Major scratches will likely need professional attention.
There’s no guarantee you will recoup the value of cosmetic work done ahead of a sale, but it will reduce the likelihood of haggling and improve your chances of an easy sale.
How to find the right buyer
Clearly, someone who really wants your car will give you the best price for it.
Whether a private punter, a dealer or a car buying service, there will be specific ‘sweet spots’ where different buyers will offer the best prices. You just need to find the right match for your particular car, so here are some things to consider:
- Selling privately This will, in theory, always get you the best price, and works particularly well for older, cheaper cars, where a private purchase from someone prepared to take a £1,500 punt can return far more than a dealer. If you’re trying to flog a more expensive motor, you could find yourself with a limited numbers of private buyers. Forking out £15,000 or more with no warranties or comeback becomes a large risk.
- Dealer or car buyer service If your vehicle is no more than six years old with less than 60,000 miles on the clock, you’ll probably get the best price from a franchised dealer specialising in your make of car. Likewise, there will be dealers or car buying groups that specialise in particular ages, mileages or types of car. But always shop around.
- Hedging your bets The only way to be 100% sure you’re getting the best price is by getting multiple offers. Not only will this increase your chances of finding the best buyer, but it will reassure you their offer is a fair market rate.
Whether you’re selling or buying a vehicle, always be prepared to haggle. Great negotiation skills will help you get the best value for your car, but be realistic, and understand that you’ll never sell it for as much as you would pay to buy that same car off a dealer’s forecourt.
And remember that your car is depreciating every week, so there is a point where ‘holding out for a better price’ can actually end up getting you less.