Car is one of the assets one can acquire ownership through buying .Assets are bought at certain prices and with time their many value decreases .Later when the time of selling comes, it will fetch lower prices. Actually, you will incur loss by selling your car at a lower price than you bought it. Therefore, it is advisable to consider depreciation when purchasing a car so as to minimize on loss you might incur later . Depreciation of assets is an inevitable eventual scenario. Fortunately, if you can sell a car at much higher price than you bought it , then it is a profit.
The unavoidable wear and tear that cars faces , ends up reducing their monetary value. When driving a car, you gradually hit against hard objects on the road. It could be pot holes, walls ,pillars, or even another car. Also the tires are worn out by the frictions and contact with the tarmac. Though minor as they look, these wears and tears will fetch loses. The difference in the high buying and the selling lower price of your car is called depreciation. Analysis on the depreciation of new cars indicates a loss of about 30% to 60% of their buying price. This a huge loss of the car money value and it occurs within the first few years of their purchase. Precisely , car depreciates in the first 12 months ,thus we should keenly consider the car depreciation, car depreciation per year to realize minimal car loses.
The most noble economical idea is to purchase second hand cars instead of brand model cars. This ensure you avoid the huge depreciation within the first year as it the case for new brand cars. There are good existing examples of the depreciation incurred in new cars. For instance buying brand car for $ 330,000 and a year later selling at $ 130,000.This is a very enormous loss. However, the depreciation rates decreases after the first few years. Different cars have different depreciation rates, some depreciates more than others. The law of supply and demand have influence on some car models. The most prestigious and desirable cars suffer less depreciation. An example of this is the Fiat 500.While the commonly found cars such as chic rivals faces more car depreciation , car depreciation per year.
The car building quality has a great role in alleviating the depreciation rates. For instance the Audi cars are known to posses quality manufacturing standards, usually earns a premium for second hand prices. Other brand such as Honda civic Hybrid are currently gaining demand and therefore reducing the rates of depreciation.
Car depreciation lowers the selling price of both new and second hand cars. Therefore , maintenance and care given to the car can lower the depreciation rates.