Business Car Finance

Maximise the resale value of your vehicle

Although it is a hidden cost, it is nonetheless true in most cases that depreciation is one of the biggest ongoing expenses involved in vehicle ownership. Depreciation is the name given to the loss of value your car will almost inevitably sustain as the years go by.

Depreciation is also a key consideration when deciding upon the residual value, or balloon payment, for the vehicle finance you choose, since your vehicle's anticipated value at resale is crucial to these calculations. Since your monthly loan repayments are dependent upon this balloon payment, it is important that you give the issue of your vehicle's depreciation some thought.

With a bit of forethought and forward planning, and provided you look after your vehicle, you can minimise the cost of depreciation and consequently save a significant amount, both now and in future.

Put your best foot forward

The process of looking after your investment starts before you've even put pen to paper, with your choice of vehicle.

One terrific way to lessen the immediate blow to the value of your new car the second you drive it out of the dealership is to purchase a demonstrator model or a used car. However, should you be determined to buy a gleaming new model, it will help if you buy at a time that coincides with end of year sales or model run-outs. Most people are drawn to the possibility of saving hundreds, if not thousands, of dollars straight off the bat in this fashion, even if the roll-out of new models can have an impact upon vehicle resale values down the track.

Investigate all the options available to you before jumping in to purchase, to maximise your chance of a great deal. Another good way of cutting the amount you pay for the car upfront is to hunt down drive away deals. Remember that the less you pay now, the less value there is to depreciate later on.

On the other hand, you could put your feet up and let a car broking service take care of the sometimes boring intricacies on your behalf.

What's in a name?

Well, sometimes quite a bit, actually.

When the time comes for you to sell the vehicle, you will obviously get more for it if is a make or model that used cars dealers are particularly interested in. The primary determinant of this is the reputation of the vehicle model in question. Those that are renowned for their good workmanship and dependability ought to be highly prized, since they are almost certain to command higher prices at resale. It is also true, of course, that fairly arbitrary conditions such as varying fuel prices can be of disproportionate importance. However, since these factors are next to impossible to closely predict, the fundamental importance of a solid reputation remains.

It is worth noting that market trends of late suggest a lessening interest in larger vehicles and a related boom in cars running on diesel and LPG fuels.

Play to the crowd

There is a saying that bears remembering – fashions change, style is forever. Things that are popular this year will not necessarily be of any interest in years to come, so it pays to stick to vehicle choices that reflect traditional preferences, such as neutral colours and unobtrusive bodywork. You will have to decide whether your love of tail fins and handpainted bodywork is more important than the potential effect on prospective buyers later on.

Another timeless truth is that safety and comfort features like power windows or side airbags, which may seem superfluous to your requirements, will always make a vehicle a more attractive catch at resale.

Look after your car

Even if the vehicle you buy and the purposes you put it to are out of your hands, due to work or financial considerations, one thing you can control is the condition you keep it in.

By servicing it frequently, you guarantee that it will maintain a healthy proportion of its original value, and if you store it in a garage when it isn't in use and regularly go over both inside and out to keep it looking fresh, you will make a serious difference to its potential come resale time.

Just one more thing

Prior to putting the car on the market, take a look at any damage it has sustained and compare repair costs with the loss you will incur by letting it be. Also bear in mind that, aside from losing resale value, many potential buyers may be scared off, even if the wear and tear is no more than cosmetic.

The general rule when it comes to selling is that you stand to make more as a private seller. However, first factor in the time that may be eaten up by the selling process, and the period between selling this one and buying a new one, or alternatively the running costs of owning two vehicles should you purchase before selling instead.

Reach out to those who know

By planning for the future you will maximise the resale value of your car. Equally, you will be safe from fluctuations affecting resale if you determine the optimal balloon payments with respect to projected depreciation when selecting car finance.