JOHANNESBURG, South Africa – When you buy your first car, brand new or a good used, everyone will tell you that the value of this big-ticket asset will depreciate from the moment you drive it off the dealer’s floor. While this is true in part the longer you own it and the more you drive it, there are ways to protect and maintain the value of your car.
The following tips can assist you in getting a better return on your asset when the time comes to trade your vehicle in, sell it privately, or upgrade newer. As the country’s leading provider of innovative vehicle and asset solutions, WesBank highlights some of the key factors that could affect the resale value of the car.
However, before we unpack these factors, it is also important to understand some of the common terminology used by the motor industry when selling…
The first one is retail price – the recommended selling price, excluding optional extras. Dealers incur costs such as marketing, insurance, vehicle reconditioning and repairs, facility overheads, and staff remuneration.
So need to factor some profit into the selling price.
The trade or market price is usually lower than the retail value. While this value may vary in line with vehicle demand this is the value to be considered when trading-in or selling.
The term ‘depreciation’ refers to the reduction in the value of an asset over time due to factors such as mileage and wear-and-tear.
It’s also advisable to do some homework before committing to a vehicle purchase – can pay off down the line when it’s time to sell the car so here are recommendations from WesBank…
• Consider the historic market demand for a particular make/model.
• Ttwo-door or four-door more popular?
• Is automatic preferred?
• Diesel or petrol?
Used-car websites can be extremely valuable for researching popular models vehicles are the most popular, fastest sellers of have retained resale value over time. The best time to trade is when the trade value for the car is more or less in line with the settlement amount owed to the bank.
Kutlwano Mogatusi, WesBank’s communication specialist, told The Corner: “Variables such as mileage and overall condition will also affect resale value. It can be tempting to consider a bargain deal on a particular vehicle because it has a high mileage but this could prove costly down the line.
“If the vehicle also requires ongoing maintenance it might be worth far less than you expected when the time comes to sell.”
It’s important to look after your vehicle by servicing it regularly and according to the manufacturer’s service intervals. This will reassure the dealer that the vehicle has been well-maintained.
MAKE AND MODEL – BE CAREFUL
To ensure that you get the best price:
• Choose vehicle make and model carefully – colour (white or silver considered best bet) and some brands are expensive to maintain or require more after-sales support
• Keep a detailed service record – be diligent, stick to the maintenance schedule and keep a record of everything worked on in your vehicle: a clean record will benefit you when it comes to price negotiation
• Use it, don’t abuse it – self-explanatory and refers to all aspects of the car, from brakes and transmission to paint chips, dented rims or a few dents – all will be checked by a potential buyer
• Keep your car’s papers in order – original registration and proof of payment of the annual vehicle licence fee; you should also ensure there are no outstanding fines or e-Toll costs owing.
MECHANIC CHOICE VITAL
• Deal with the small issues – if you notice something wrong with your vehicle – anything from an unusual sound in the engine to a few scratches – check it and deal with it: to preserve the resale value, it is always better to be safe than sorry
• Use a reliable mechanic – it is recommended that you service and maintain your car at a workshop with a good track record and trusted mechanics; remember that franchise dealerships have expert vehicle knowledge and qualified technicians who are specially trained to work on your specific brand
• Where you park your car can also impact its resale value – while a closed garage is ideal, this may not always be possible; if not, try not to leave your car parked under a tree or exposed in the sun for long periods at a time to maintain the exterior paint – also consider using a sun visor and even car seat covers to preserve the car’s interior
“Another useful tip is to resist over-embellishing your car with aftermarket accessories. While part of the joy of owning a car is making it your own, these personal style additions could impact negatively on its resale value. You might think oversized rims, outrageous body paint or a booming sound system are improvements but be aware that the next owner or the dealership where you plan to trade in your car, may not!” cautioned Mogatusi.
“Keeping your car clean and in the best condition possible is probably the best way of ensuring it retains its value over time. A small scratch or dent might not seem a big deal now but accumulating many such dents or scratches over time will detract from the car’s overall appeal. Maintain the appearance and mechanical condition of your car during your ownership cycle to ensure a reasonable return on your investment when the time comes to sell it.
“Remember to keep all these tips in mind when looking to buy your first car and applying for finance through WesBank’s unique Graduate Finance offering,” says Mogatusi.