Choosing a car that’s low on depreciation is usually a smart move if you buy it new. When you go to sell your Honda CR-V, for example, you’ll stand to keep more of your outlay, percentage-wise, than the guy who is trying to move his Mitsubishi Galant.
But depreciation is a tricky thing and can be affected by many factors—including market changes, recalls, rebates and incentives, and, of course, the age and condition of the car. Low depreciation is only one reason to buy a car—and may not be the most important one, after all.
There are other factors to consider. How long are you going to keep it? What kind of driving will you do? Are the car’s features and benefits what you want and need? And so on.
“The average five-year-old car is worth a mere 28.5 percent of its original value,” says one of the senior editors at Cars.com. Depreciation in a used car just keeps on dropping, but you can control when you take the hit: Do you pay more up front, for a car like the CR-V, or buy something that’s already considerably depreciated?
Cars with high resale value will cost you more in the used-car market than their competitors, but you’ll likely get more for them when you resell in the short term (three years or less). If you plan to keep the car longer, you might do better buying a competitor to the CR-V, like the Ford Escape for instance, with a lower up-front cost.
New cars with good resale value, like the BMW X5 or the Honda CR-V, typically get listed in a number of surveys. One of the better ones, by ALG, recently ranked Subaru as its top-rated brand for residual value in 2011.
But there are other ways to get a good determination of a used car’s resale value. Check out our Price Calculator, which gives you an instant view of the market for your vehicle (or another), plus a graph of depreciation as it relates to mileage.
There are lots of variables to consider when thinking about resale value. As many have said, the best way to deal with depreciation is to buy a car new and keep it forever. The same is probably true for a used car: Buy a good one and keep it a long time.
Have you bought a used car recently? Did you consider depreciation as a factor?