You have a lot on your mind while shopping for a car: looking at different brands, considering a variety of models, and trying to figure out every last detail and feature you’ll want to enjoy for the next five or ten years. Let me put one more thing on your plate (I know, I’m generous): the expected resale value for the car. I know that’s probably the last thing you’re worried about, but it should be somewhere in your mind, even if it’s near the back, as you’re looking at different options and trying to decide which is right for you.
No matter what type of vehicle you’re interested in or how you plan on paying for it, the future resale value of your car is important and worth considering. To be fair, none of us can see the future, and even the experts can only try to make their best guess about what model right now will be worth the most in the years to come. That said, certain trends are easy to follow and consider as you look at a vehicle, plus ways to help maintain the highest value for your car as you drive it. Let’s take a look at them.
Why You Should Care About Resale Value
Reason #1 – It Protects Your Investment
The simplest and most-straightforward reason you should care about the future resale value of your vehicle is that you’re spending a lot for it, and you should want it to still be worth a lot later on. A car is one of the biggest purchases most of us make, which is why we all spend plenty of time trying to find the perfect one. If you’re going to drop $30k on a car, then you want to know it will still be worth close to $20k after five years, not just $12k or less. Even if you plan on driving it until it turns to dust, you should want to know it has retained its value for a long time.
Reason #2 – It Improves Resale or Trade-In Later
If you know that you’ll want to get a new vehicle in five or six years, then the resale value of the car you’re shopping for right now is particularly important. The kind of money that you can get for it by selling it to someone or using it as a trade-in down the line is entirely dependent on its resale value at that point. Sure, there are strange situations like what COVID did to the used car market, but in general, you need to consider depreciation and resale value to get the most for your vehicle when you sell it or use it for trade.
Reason #3 – It Can Lower Lease Payments
Even if you’re not looking to buy a vehicle but instead want to lease your next car, then its resale value still matters. When figuring out what you’ll pay on a lease over the course of a couple of years, one of the most important factors is the “Residual Value” of the vehicle, which means its value at the end of the lease. You’re essentially paying for the depreciation that occurs while you drive a leased vehicle; higher residual value means you pay less on a lease. No matter how you’re shopping, it still matters.
Reason #4 – It Can Improve Insurance Payouts
In the event that you get into a crash or have a major issue with your vehicle, and it’s considered totaled, your insurance will pay you the “actual cash value” of the car at the time. This is decided based on a number of factors, such as how well the vehicle was maintained, along with its resale value based on depreciation for the model you have. The more your car is worth in this scenario, the greater the payout you’ll receive. This payout can make it easy to get your next vehicle, or it can potentially leave you underwater if you still owe more for the vehicle than you receive for its current value.
Ways to Retain Resale Value:
Way #1 – Choose a Popular Model and Options
One of the simplest ways to optimize future resale value when shopping for a vehicle is to choose a popular model. SUVs and trucks tend to be the most popular options; this trend isn’t likely to change any time soon, with Toyota being one of the best brands for maintaining a high value. Luxury models are among the worst for retaining their value; three of the five models worst hit by depreciation these days are from BMW. You should also look at options that are popular because those will still be in demand and worth the most in the future: this means picking an exterior color like white, gray, black, or silver, the most popular colors. It helps to choose a model with an automatic transmission if you want to optimize resale value, plus interior features that will remain sought-after in the future.
Way #2 – Follow the Service Schedule
Perhaps the most important thing you can do to keep the value of your vehicle as high as possible is to follow the service schedule provided by the manufacturer. This ensures your car runs beautifully; keep a record or journal to prove it was maintained properly. You should also have any issues addressed immediately, rather than ignoring them, and keep your vehicle clean, especially if you live somewhere that salts the roads in winter. Things like an engine that needs work or rust on the body of a vehicle will greatly reduce its value.
Way #3 – Drive Your Vehicle Regularly
You want to drive your vehicle regularly, but you don’t want to overdo it to keep your vehicle’s resale value high. In general, a yearly average of about 10,000 miles is the sweet spot to avoid having high mileage on your car that can be seen as excessive use and reduce its value. At the same time, you don’t want mileage that’s too low because this can indicate that your car wasn’t properly maintained. A car just sitting around all year can have engine issues and other problems if it isn’t stored and serviced properly.
Way #4 – Consider Warranty Coverage
Lengthy warranty coverage is typically best for a vehicle when you’re looking to maximize your long-term resale value on it. Of course, you want to be sure the warranty is transferable to a new owner; otherwise, it doesn’t matter that much. If you’re looking to sell your vehicle after a few years, a new buyer would definitely be more interested in your car if it’s coming to them with another couple of years of warranty coverage from the manufacturer. This might not matter quite as much to a dealership if you’re using your car as a trade-in, but they might still give you more for it since they can use the warranty to appeal to a potential buyer.
A Crucial Aspect of the Car Buying Process
As you can see, resale value is a big thing to keep in mind and has many benefits for you in the long run, no matter what kind of vehicle you’re interested in. Cars might not be a great investment in terms of making a profit on them, but they still represent a major purchase that should retain its value for you. Just be sure to do a little extra research, consider your options, and choose a model with features that are likely to remain in demand several years down the line. This will get you the most for your car later on, which can help save you money when shopping for your next vehicle.
