What is Vehicle Depreciation?

There’s no better feeling than sitting behind the wheel of your brand-new N Charlotte Toyota vehicle. That new car smell is gracing your nostrils, every surface is wiped down and cleaned perfectly, and the odometer is ready for a fresh beginning with you as the driver. Unfortunately, buying a new car doesn’t come without its share of financial fears and cautions. If you plan on keeping your vehicle for more than seven years, you’re in luck! But, if you want to upgrade your vehicle every few years, you’ll come across something called vehicle depreciation. This metric can make or break your vehicle’s resale value and hurt you when it comes to trading in and getting a new vehicle. If you’re not sure about what vehicle depreciation is and/or how it works, don’t worry! Toyota of N Charlotte is here to help make sense of all the financial confusion.

What you need to know about vehicle depreciation

At auto dealerships like Toyota of N Charlotte, vehicle depreciation plays a pivotal role in the car sale and trade in processes. For those purchasing a used car, it can work in your favor through a great price on your next ride. But, when purchasing a new vehicle and then trading it in, you’ll find yourself coming out upside-down. Before we get into the details about vehicle depreciation, first, a history lesson.

Depreciation was first introduced in the 19^th century by rail road companies wanting to maximize their profits on paper. Essentially, a value was assigned to a train car and that value was matched against the annual income of the railroad company. This value would degrade over time as it was used and showed a larger profit margin.

So, what does that mean for your N Charlotte Toyota vehicle? Essentially, that new vehicle you just purchased is losing value quickly and will continue to do so until it loses over half of its original value. Several factors can contribute to this process, including:

Initial car buying expenses

While it’s easy to get hung up on the sticker price of a N Charlotte Toyota car, there are more expenses in store. Tax, tag, title, dealer fees, and more contribute to the overall cost of the car you’re purchasing and its money you won’t be able to earn back when trading in. Not only that, but your new car starts the vehicle depreciation process as soon as you sign your last signature and drive it off the dealership lot.

Advancing Technology

With each model year that’s released for a N Charlotte Toyota vehicle, the previous model year loses value. Because of vehicle depreciation and the fact that drivers are purchasing the newer models, your 2015 model won’t get you as much of a return as a new 2019 model will when trading in.

You’re driving a less desirable vehicle

Just like fashion and technology goes in and out of style, N Charlotte Toyota vehicles do too. For example, SUVs are currently more popular than sedans and will get you a better resale value.

How to prevent vehicle depreciation

To help mitigate the affects of vehicle depreciation, our Toyota of N Charlotte auto sales specialists recommend these things:

• Stay up to date on routine auto service.
• If you have the budget, purchase a newer vehicle with better technology and safety features.
• Keep your vehicle’s odometer reading low by driving it less.

Still unsure about vehicle depreciation? Toyota of N Charlotte is here to help! Give us a call at (704) 875 – 9199 seven days a week with any questions.