How Does Your Car’s Resale Value Affect Your Wallet?

by Miranda Marquit · 2 comments

Depreciation is one of the biggest downsides of buying a car. The longer you own your car, the less value it retains due to wear, tear, and the environment. Unlike a home, a car does not increase in value (unless it’s a collectible item).

On top of that, we’ve all heard that buying a new car is a bad idea because once you drive it off the lot, it loses a significant portion of its value instantly.

Because of the threat of depreciation, many money experts recommend you buy a used car, or perhaps a lease return. That way, most of the depreciation is already complete, and you don’t have to worry about how much value you lose.

If you do buy a new car, though, paying attention to the resale value can get rid of some of the sting associated with depreciation.

What Does Resale Value Mean?

If you plan on purchasing a car and keeping it for several years then upgrading, you have to consider the value of selling it at that time. As I mentioned, if you tried selling a brand new car you just purchased off the lot, you’d likely lose several thousand dollars right then.

To avoid a huge loss on the cost of your car, it’s important to keep in mind the resale value while you’re researching to purchase it.

It’s important for cars to have a high safety rating as well as good gas mileage, but you need to consider what its value will be a few years from now.

Cars with the Best Resale Value in 2015

Every year, Kelly Blue Book (kbb.com) puts out a list of the cars with the top resale value. Some of the best resale values for 2015, according to Kelley Blue Book, include:

  • Honda Fit (subcompact car)
  • Subaru Impreza (compact car)
  • Subaru Legacy (mid-size car)
  • Dodge Charge (full-size car)
  • Chevy Camaro V6 (sports car)
  • Toyota Sienna (minivan)
  • Toyota Tundra (full-size pickup)
  • Chevy Suburban (full-size SUV/crossover)
  • Toyota Camry (hybrid car)

Lexus dominates the list in luxury car categories, and a Porsche hybrid is the plug-in vehicle with the best resale value.

Plan to Keep Your Car Long-term

Even though my beloved Subaru Outback isn’t on the list, I know it has a reasonably high resale value. In fact, I just checked it out on the Kelley Blue Book site, and it suggests I could sell the car for around $20,000. That’s not bad, considering that I’ve had it for a little more than three years and it’s only lost about $8,000 in value.

I’m not complaining, since I owe considerably less on the car than what it’s worth. We ended up buying new when we bought this car because it actually cost less than purchasing the same thing used.

However, I don’t plan to sell the car anyway. My husband and I generally keep our cars for eight to 10 years. By the time I get ready to buy another one, my son will be old enough learn to drive, and this car will be perfect for him.

If you plan to sell your car, though, it makes sense to pay attention to the resale value. You want to be able to recoup as much of the cost as possible, especially since financing the car could easily translate into a lot money on interest payments.

In my case, resale value isn’t really a concern. I’m happy to buy a late model and drive the car for a long time before handing it off to someone who needs it.

The last car I owned went to my husband’s parents, since their vehicle had just died beyond repair. However, for purposes of selling in the future, resale value on a new car matters a lot more.

Do you pay attention to resale value when you buy a car? Does resale value affect whether you buy a new or used car?

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{ read the comments below or add one }

  • Jayshree Makadia says:

    Whenever you buy a car checking its resale helps you in future incase if you want to sale the car again. The resale value is of 5 years.

  • Young Millennial says:

    I pay some attention to the resale value, but it is not usually my focus. I have owned a few vehicles in my life, worked for a car company, driven dozens of different vehicles and I have learned that you should look at the average cost per mile (or kilometer). That does take into consideration the resale value as well as the amount you paid up-front, but also how much money you spend on insuring, running and maintaining the vehicle.

    If a vehicle has a high resale value, but also a high operating cost, the money that you spent over the vehicle’s life (or the time you owned it) could off-set the high resale value. This calculation is much easier with vehicles that have been around for a while like the Camry and the Impreza.

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