Though cars' value will change over time, those that you take care of will likely retain value. What are some of the factors that determine the worth of your car?image of car and dollar sign

Every car, even those of similar makes and models, will likely have different values. So, to determine the exact value of yours, you’ll likely rely on a few different sources. The better you can preserve the value of the car, the more adequate your resale value. Also, by measuring value, you might be able to better target your auto insurance.

How Do Car Values Change?

No car remains new forever. In fact, as soon as you drive it off the lot, the value will likely decrease from what you paid. That’s because of depreciation—the phenomena of new items losing value over time. Over their lifetimes, most standard cars will depreciate. That’s because you use them, put miles on them, and they begin to show wear and tear. In fact, many cars lose up to 20 percent of their value in the first year of use.

Different factors impact the rate of depreciation. These might include:

  • Your personal usage (including mileage) and upkeep of the vehicle.
  • Whether you have had an accident. Cars with damage often depreciate, even after repairs.
  • Economic and market factors.
  • Whether the vehicle has enhancements or modifications.
  • Certain warranty conditions. Vehicles without a warranty will likely lose value.

At times, a car’s value will actually increase with age, such as in the case of rare or keepsake vehicles. However, not all cars qualify as antique or rare. Different factors like rarity, upkeep and the vehicle make might determine this factor. A standard car will usually face depreciation much more often than it will increase in value.

Determining Your Car’s Value

If you have questions about your car’s value, you have a variety of outlets to investigate. Determining value can take a simple few minutes out of your day. However, you also have a lot of opportunities to dig into the details. Look to these outlets to find out more.

  • Check your car’s Blue Book® rating. The Blue Book helps drivers determine the approximate resale value of their vehicle. This can help you better negotiate deals when trading the vehicle. It can also help you and your insurer determine the totaling value of the vehicle. Many services (print and online) will provide approximate appraisals.
  • Have the vehicle appraised. An inspector can review the car’s mileage, usage, modifications, upkeep and history to give it an approximate value. Many car dealerships will undertake this task. However, independent appraisers can also offer this service. It’s often a good idea to get a couple of different appraisals. You’ll often find this estimate more valuable than that of a general source.
  • If you have modifications on the vehicle, the value might increase. For example, custom-designed seats or engine mechanisms might add value. Still, how modifications impact the vehicle’s value will often depend on the nature of the work. Professional modifications and those from manufacturers often add value. Amateur changes might have little or no impact on value, however. The way such enhancements affect the rate of depreciation might vary. Though they might add temporary value, the car will likely continue to depreciate.

Remember, your car’s value will vary based on multiple conditions. Therefore, you might not find some appraisals beneficial, while others will prove specific.

Why Value Matters

You might need to know your car’s value for a few different reasons. If you plan to sell or trade the vehicle, you’ll want to ask a fair price. Value will always exist, even if it diminishes considerably.

Furthermore, the value of your car might impact your insurance coverage. If you wreck or total the car, your policy will likely pay a certain sum to repair or replace the vehicle. Most insurers will use actual cash value (ACV) coverage to compensate the claimant. The amount of the payout will reflect the value of the vehicle at the time of the accident.

Often, ACV coverage this will prove adequate to repair the vehicle. However, it might not help you in situations where you'll need an entirely new car. That could prove a hassle. You might have the option to buy full replacement cost coverage on certain policies. This will pay for a new vehicle. However, many insurers don’t offer this coverage. Those that do will likely charge more for your premium.

Also, once value depreciates a lot, you might not find it conducive to carry collision or comprehensive coverage for vehicle repairs. Eventually, the cost of repairs might outweigh the car’s true value, and it might be an incentive to look for a new car. However, making this choice depends on your personal preferences. If you don’t want to take out a new vehicle loan now, keeping this coverage might still prove a cost benefit.

So, don’t hesitate to investigate the value of your car. With attention to detail, you can get appropriate insurance and resale values. 

Also Read: The Benefit of a Damage Deductible on a Motorcycle Policy

Posted 10:20 AM

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