To car enthusiasts around the world, “You are what you drive.” For others, cars are just a means of transportation from point A to point B. Regardless of where you stand, cars are a pretty essential part of most peoples’ lives. Unfortunately, from a financial point of view, they’re a bit of a money pit because the moment you pick up a new car from the dealership they instantly start losing value!
If you’re only planning on holding your a car for few years, it’s particularly wise to be aware of the re-sale value — which can easily be cross checked online.
Quick-fire average statistics on how quickly cars lose their value:
- A new car loses 11% of its value the moment you leave the dealership
- During the first 5 years, the car depreciates by between 15-25% per year
- After 5 years, the car is worth just 37% of what you paid for it at the dealership – For a $20,000 car, that’s a drop of $12,600, before you include other costs like insurance and servicing.
Some cars hold their value better than others, and our friends at AbsoluteReg put together a handy graphic showing the cars which hold their values best, along with some key factors to keep in mind when you’re a buying a car (used or new).