24 August 2017

Understanding depreciation value of your car

The value of your car reduces the moment that you drive it out of the showroom. The average new car in Australia loses 15% per year in the first 3 years – that’s a whopping 40% in the first 3 years. Thereafter, the rate of depreciation slows to around 10% per annum – assuming that you don’t drive more than 15000 km per year. Think about it this way – if you spend $100 000 of a new car, in 3 years it will be worth only $ 60 000.

Not all cars depreciate in the same way – in Australia, desirability and practicality weigh in heavily on the depreciation rate. If you have a vehicle that is desirable, and people believe that it is a practical choice – it will depreciate at a lower rate, and more slowly. Remember that desirable doesn’t always mean a status symbol or a zooty sporty car – it means that a lot of people want one of these vehicles – think Mazda6, Honda Accord, Honda Odyssey, Daihatsu Terios, Audi Q5, Volvo XC60 which all hold their value a little better than the average car. But, at the end of the day, even these vehicles will lose their value just like all other cars.

Lets examine “practical”. In order to be considered practical, a car should have decent fuel economy, be reliable and easily usable for the daily commute.

On the opposite end of the scale are your more expensive vehicles, such as the Lamborghini Gallardo, which depreciate much faster than the average. Here you have a limited market in people who have the ready cash to buy such a vehicle, and best you have enough time to avoid selling up in a hurry and cutting your losses. Also in this category from a depreciation perspective is any sports car that has a poor reputation for durability.

Mileage is a big issue when it comes to depreciation of a vehicle – low-mileage vehicles will tend to look and feel better, and be more reliable. Therefore the lower the mileage, the lower the depreciation.

The desirability of any vehicle model will reduce when a new model is released (this is why dealers offer discounts on the last versions of an older model).

So to summarise – if you want to minimise the loss of value of your vehicle due to depreciation, buy a car that is loveable, practical and more than a year old.

You may find these interesting

What To Do If Someone Hits Your Parked Car

Coming back to find your parked car damaged is never fun, but knowing how to respond correctly can save you time, money and stress.

Firstly, understand that getting upset is natural, but taking a deep breath will help you make better decisions. Examine your car thoroughly and document any visible damage, taking multiple photos from different angles, including close-ups of dents, scratches or broken parts, and capturing the surrounding area, such as road signs and markings, for context.

Next, see if you can locate the driver responsible. Sometimes, people leave a note with their contact information and insurance details. If there’s no note, look for witnesses nearby who may have seen what happened. You can also check for CCTV from nearby businesses, homes or on the street, as some areas have coverage. If you’re unsure, consider contacting the local council to find out whether cameras are in place that might have captured the accident.

If the driver didn’t leave a note, or if they did but are unresponsive or the information they provided seems incorrect, contact the police to report the accident and provide all the information you have, including photos, footage and witness statements. Be sure to request a copy of the police report, as it can be useful when dealing with insurance.

If you’re still having a hard time getting a hold of the at-fault driver and therefore cannot claim directly through their car insurer, it’s time to lodge a claim with your own insurance provider, if you have one. Provide them with as much information as possible, including the police report. From there, your insurer can determine whether your coverage, along with the information you have, will cover the damage to your car.

If your car insurer happens to find information about the at-fault driver and is able to have them lodge a claim so the costs of the damage are recoverable, you can contact Carbiz for a replacement car while your car is being repaired or until it’s been deemed a total loss. This ensures you’re not left without a car during this time, giving you peace of mind and the ability to keep your life moving.

Read more
What It Means When Your Car Is Declared A Write-Off After An Accident

If your car has been involved in an accident, you may hear the term “write-off” from your insurance company or repairer. But what does it actually mean when your car is declared a write-off? Understanding this process can help you make informed decisions about your car, repairs and costs.

A car is considered a write-off when the cost to repair it after an accident is too high compared to its market value. Insurance companies often calculate the repair cost and compare it to the car’s value prior to the accident. If the repair cost is more than a certain percentage of the car’s value, typically around 60–75%, the car may be classified as a write-off. This doesn’t always mean your car is completely destroyed; sometimes the car could technically be repaired, but the cost would outweigh the benefits.

There are different types of write-offs. A total loss write-off is when the car is so badly damaged that repairing it is not financially viable. A repairable write-off is when the car can be fixed, but it requires significant repairs. In either case, the insurance company will usually pay out the car’s value at the time of the accident, minus any applicable excess or deductions.

The cost implications of a write-off can vary. If your car is declared a write-off, you may need to consider the cost of replacing it with another car. Some car owners opt to keep a repairable write-off, but this comes with the added repair costs, which can be substantial depending on the extent of the damage. Repair costs can quickly add up, especially if the accident involved structural damage or expensive parts.

It’s also important to understand that a car that has been written off may have a lower resale value even after repairs. Future buyers often view written-off cars as higher risk, which can affect the cost of insurance and overall value.

If your car is declared a write-off after an accident, speak with your insurance provider to understand your options. You may receive a payout for the car’s value, and in some cases, you can negotiate repair costs or even retain the car if it is repairable. Knowing what a write-off means, how it affects repair costs, and how it impacts the car’s value can save you time, money and stress after an accident.

Read more