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Car Depreciation And Auto Insurance

Many of our assets lose value over time. This is also true for cars, after 5 or 6 years, a car may not even worth half its purchase value. You know it, we know it and insurance companies know it. This is the main reason why they offer so little as reimbursement when making a claim. However, there are ways to stop this unpleasant car depreciation and we will talk about it. If you want to know more about car insurance and get an online insurance auto quote for free, you should visit our websites and fill in our quote form.

When you first purchase a new automobile, a significant portion of the price covers items like freight, delivery, taxes and add-ons that don’t tend to have a lot of impact on the actual value of the car. When you drive your new car, these items immediately drop off of the value of the car so if you tried to sell your new car on the market a week later, you are going to receive significantly less than you initially paid. Edmunds states that cars lose about 11% of value within minutes after purchase. This usually means several thousands of dollars.

During the first five years, a car has a residual value that decreases around 20% each year. After that, the drop off is slower. Depreciation takes into accounts factors depending on each car’s maintenance and usage: mileage driven each year, overall condition, vehicle age, make, model, and driver habits.

There are few things you can do to stop your car depreciate so fast.  First of all, provide good maintenance.  Change oils and provide technical inspections periodically. Ideally would be not to have something broken, but if you repair it, make sure to use original manufacturer parts, not after-market parts.

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