23rd January 2019 - 3 min read
As we all know, cars are big ticket items which depreciate in value over time. While some may argue that there are collectible and limited edition cars that have gone up in value, the majority of us don’t have the luxury to buy cars such as that.
While we are always concerned about its resale value to ensure we retain maximum value, could there be a time that purchasing a car would significantly cost you more in terms of depreciation as compared to other times?
First of all, a car’s value depreciates based on the amount of time and years it has been used. Beyond its age, it is usually evaluated based on the mileage and the basic condition of the car. Cars that have run a higher than average mileage tends to fetch lower prices. Cars are usually gauged based an average of 20,000 kilometers a year.
That is the same number of times a car using fully synthetic oil goes through a service, every six months or every 10,000 kilometers. Which add up to a year’s worth of usage. Cars that have been in accidents depreciate in value quicker as well. Despite having it fixed and not visible to the naked eye, car dealer inspections tend to always find the defects due to a prior accident.
A car is registered based on the year it was purchased. Therefore you could lose out significantly in terms of value if you buy your car in December. As when it crosses over to the following month, it would be considered a year old. Imagine picking up a brand new car on the 31st of December, being all set to take on the new year in style. One day later despite all the style in the world, your car is going to be a year old based on its registered year.
Go on to motortrader or Carlist.my and checkout some of the postings. You would notice that it advertises using the year and not based on the month and specific date it was bought.
Despite buying a car towards the end of the year sounding like an unfavorable condition due to the reason above, this is when most car dealerships give you the best deals to encourage a sale. In some cases, all the free car services, extended warranties, free tinting and added features that come along with the car may be worth the purchase.
Sometimes you may even find the upside depending on an individual’s situation. For example, if you were in your retirement years and you have no intention of switching cars beyond this purchase, you could take advantage of the special deals and pay less for a car you wanted to buy. Not to mention you could trade-off your old car before it falls over into the following new year too.
If you are intending to purchase a car in the near future, check out our comparison tool for hire purchase and pick one that works best for you.
Have any comments regarding this article? Tell us in the section below.
Subscribe to our exclusive weekly newsletter and we’ll bring you the week’s highlights of financial news, expert tips, guides, and the latest credit card and e-wallet deals.
Stay tuned for what’s to come next in the personal finance world