Almost every person knows how depreciation works- you step out of the lot, and your car depreciates faster than a skipper falls. And it’s nothing to be worried about because every car depreciates, but yes, knowledge is important to bag better deals whether you buy or sell.
You don’t want to get deceived and suffer losses because you don’t have enough knowledge. So being a little heedful is what’s needed here before you wrap up everything.
Especially while buying used luxury cars, depreciation becomes a significant facet you can not overlook. After all, the entire deal depends on the depreciated car value- whether you are the buyer or the seller- if your aim is closing a beneficial bargain, read on!
1. Do luxury cars depreciate faster than standard cars? If yes, why?
Yes, the market value of luxury cars depreciates at a faster rate than any standard car. This is because luxury cars cost much more than what a standard car does. Plus, these cars have higher maintenance costs, also known as the running costs- thus, they depreciate faster.
In other words, the consumers in the automobile market have two options to choose from- they can either go for a used vehicle or a new one. And since not all understand what it takes to drive a luxury vehicle, they prefer a standard car or a new luxury if they have the pocket for it. All In all, they like to risk the least.
Moreover, in simple economic terms- the higher the supply, the lower the cost- and hence the widened gap between the initial buying price of the car and the resale price.
2. At what rate do luxury cars depreciate in the first five years of purchase?
A new standard variant drops its value by at least 10% the moment it is driven off the lot! This increases by 5 per cent in the case of a luxury car, and it is also possible that the car loses 20% of its overall value in the very first year of its purchase. This is followed by a depreciation of 15% every year, which brings you to 50% overall depreciation by the 5th year ends. If we talk about specific models, a Mercedes model can just as easily be depreciated by 60% of its total value by the 5th year.
And this all paints a negative picture; the question is- why buy a used variant then? The answer would be- depreciated value doesn’t necessarily point to depreciated performance. The steep depreciation is the result of the market, but a luxury car remains a luxury car. And buying it used comes with so many pros. Sure, you won’t be able to sell it for a good margin, but you could get it at 50% of its value, use it for a minimum of 6-7 years and get rid of the car as you wish. Not every purchase is made with a motive of reselling it, some are to enjoy while they last!
3. What are the best pre-owned luxury cars with the lowest depreciation rates?
The thing with second-hand cars is that they don’t depreciate as much as a new variant does. The major depreciation that a car goes through is in its initial years. So if you want to avoid losing money, just go for a variant that is at least three years old and has been maintained well by the owners. This way, you save at least 30-40% of what the initial value was.
4. What parameters are judged while car valuation?
Many parameters are considered when a car is valued. Once the car has been inspected, the first thing that is taken into consideration is the odometer reading and the age. So, for instance, if you are trading your car with a dealership of used luxury cars, they are much likely to inspect it inside out to get you a quote after considering the age and odometer’s reading. After which, everything from the exteriors and the interiors is weighed. Moreover, how well the maintenance has been done plays a crucial role in its valuation too. If you’ve been a responsible driver, you can negotiate on the pricing and get them to pay a little higher. But if you are on the opposite side of this, try to negotiate on the interest rates.
Depreciation can look like an enemy to you, but it could just as easily become your friend. All you’ve got to do is use this knowledge to your benefit. Now that you know buying a new variant can cost you bucks, why don’t you shift towards pre-owned instead? It’s cheaper, just as reliable as a new variant is, it is sustainable and will give you all the luxurious feel you ever wanted.
So here’s the deal- benefit from the loss the first owner had suffered. Possibly, the first owner didn’t bother much because we all know he had the big bucks to spare. But his money could help you. So choose wisely.
Also, maybe check out Kings Auto’s website? If you’ve understood anything from the above discussion, our bet is you would want to know a credible dealership that merchandises pre-owned luxury cars.
So check out Kings Auto, you’ll get it all there!