We all know a new car starts to lose money the minute it drives off the showroom floor. But did you know that how you look after your car over its life will have a huge impact on its resale value when it’s time to sell? So how can you get the best possible resale value on your car?
I have a friend who shall remain nameless. She owned her car for 10 years from new. In those 10 years she frequently travelled with her two dogs, smoked, rarely washed it, parked it outdoors, had cloth seats and rarely serviced it. After 10 years, her $23,000 car ended up being given away for scrap metal—it was unsalable. The same car maintained its value well at $5,700 on redbook.com.au. That’s nearly six grand she lost on the resale value of her car because she couldn’t be bothered to look after it.
Think about it this way: for most people, their car is their second-largest investment. Yes, cars all depreciate, but that depreciation can be reduced to help you maximise your trade-in or sale value when it comes time to upgrade – why wouldn’t you want to protect your asset?
There are some major sins when it comes to reducing the resale value of your car. Smoking, dogs, toddlers and not washing and servicing your car regularly are some of the biggies. Fortunately, the damage of most of these can be reduced, if not avoided, with a little fore- thought.
Fighting the Resale Value Depreciation Battle
Here’s my guide to the major sins that quicken the depreciation of your car’s resale value in order of potential cost impact:
1. Being lazy with services:
An un-serviced (or under serviced) car without a properly maintained logbook is by far the worst thing you can do for resale value. It tells the buyer there are likely to be car repair problems down the track, reducing confidence in your car. If someone chooses to make an offer anyway, it will probably be lower than what you want as they need to account for the cost of future repairs.
2. Smoking in your car:
Smokers don’t realise it, but smoke in your car gets into every fibre of its interior. It’s probably the hardest thing to undo. For a non-smoker (or anyone, really) when you step in to test drive a smokers’ used car it’s a huge turn-off and often the deal breaker when comparing cars.
3. Protection outside and in:
A garaged car will be much more protected and hence gain greater resale value than a car that’s parked under trees most of the time. Tree sap, bird poo, sunlight and exhaust from passing cars all wear down your car’s paint over time. Sunlight will also wear down the colour on your car’s dash and leather seats.
On the inside of your car, floor mats, seat covers and toddler protection such as towels under car seats will protect your car’s longevity and are a cheap insurance policy over the life of your car.
4. Dogs and toddlers:
Having two small children myself, I understand what they can do to a car. Footprints, sand and food are the common ones. I ban food, crayons and drink bottles, but the reality is a footprint on the back of the front seats and sand they’ve brought home from school have a major impact on the wear and tear of your car’s interior. Leather seats can help counter this to some degree, as long as they’re maintained. Fortunately, eliminating the cause by banning food, shoes and crayons goes a long way to protecting your car’s resale value.
Dogs are worse still. It’s the smell that’s really the problem. Just like smoking, having a dog in your car leaves a permanent smell (yes, dog owners find this hard to believe). If a potential car buyer checks out your car and is faced with a dog smell, it will impact the buyer’s decision to buy or not to buy. Additionally, I’ve seen cars where a dog has left their doggy drool on the seats and windows—again, a put off to most people.
5. Dings and scratches:
Any half-decent car should have insurance that covers the odd ding and scratch. If you’ve collected a few minor dings and scratches over the years that weren’t worth the insurance hassle or cost at the time, it’s probably a good investment come sale time to get them repaired. For most cars worth over $5,000, it’s usually worth cashing in on your insurance and wearing the cost of the excess, or obtaining a quote from a reputable panel beater and paying a relatively small amount to make your car more saleable against competition, and to gain a few extra dollars in resale value.
It’s obvious that the lower the kilometres on your car the better. However, some people don’t realise that there is a major kilometre milestone that equals an expensive major car service. As a rule, most cars in Australia require their largest service between 80,000 and 100,000kms, which is usually at the four- or five-year mark. This is when most parts need to be replaced, which typically costs three to four times the regular cost of a service. This extends across the life of the car, so will double again at 160,000 to 200,000km (eight to 10 years) and so on. The only difference is things get worse and more expensive with age.
Some car owners try to sell their car just prior to any major servicing (potentially hoping the prospective car buyer won’t realise). While this is a bit dodgy, they also run the risk of the buyer doing the sensible thing and requesting a vehicle inspection. At this point, any good mechanic will advise of upcoming work required, which will ultimately drive down the resale value of the car. Your best bet is to avoid selling anywhere near this time, or getting all the necessary services done to sell your car in the best possible condition, hence improving your chances of the best resale value.
7. A washed car is a loved car:
Cleaning your car regulary with washing, vacuuming and annual detailing protects your paint and interior and helps it age better. (Much like good skin care.) It’s easy to spot a poorly maintained car that has had a quick detail before sale.
8. Be smart with modifications:
If you modify your car in any way over its life, such as adding larger wheels, after-market stereos, satellite navigation and alarms, bull bars, paint work, rear spoilers, subwoofers or lighting, you could be telling a buyer you’re a car hoon. The best-case scenario is that you will have added no resale value to your car for the thousands that you’ve spent. The worst case scenario is that you have put potential buyers off and lowered your car’s resale value.
The mistake many people make is they think the more they spend on ‘extras’, the more their car is worth. This is rarely the case. A handful of factory options when you buy a new car will help (such as larger alloy wheels, automatic transmission and leather seats). But after-market options will not. Avoid selling right before you’re due for a major service (the four- to five-year mark, or 80,000 to 100,000kms). If a potential buyer gets a vehicle inspection, they will soon discover that a major service is due and may use this to negotiate your resale price down.
The Finish Line
It’s important to choose a car that will retain its value upon resale. The next piece of the puzzle is maintaining your car to retain value. Fortunately a little TLC on a regular basis will help ensure you get a good price for your car when you’re ready to sell.