So, if you are planning to sell your used car in Singapore and at the same time to have a good idea of your car’s valuation to ensure that you do not sell it at an even greater loss. You have no specific knowledge and resources, so you then asked a used car dealer to canvas your ride. While the results is not what you would have expected, it is almost unthinkable that your precious ride is not worth much today. You cannot help but feel disappointed when you learned that you have lost over around sixty per cent of the original price you have bought your car for. This is due to depreciation, as the car age over time.
In accountancy, depreciation refers to the decrease of value and assets. Unlike a home, a car does not increase in value unless COE is low at the point of selling. In simpler terms, depreciation is the amount the owner loses on the value of the vehicle per year based on the assumption that the vehicle is deregistered only at the end of its 10-yr COE life-span. The value of the car body has not been taken into account.
Whatever the amount that your car fetches, that would be term as a resale value. A car depreciates over time and in order to avoid a huge loss on the cost of your car, it is important to keep in mind its resale value the moment you buy it. You need to think ahead of time and consider the factors that influence depreciation and your car’s resale value.
Here are some of the factors that can contribute to the fluctuating depreciation and can determine your car’s resale value when you sell your car.
1. Mileage – It is the total distance traveled by the vehicle over a period of time. At times, your car can be still considered relatively new when you have traveled a certain amount of mileage but remember our concept of “wear and tear”? Usually buyers will ask for the mileage first before even checking out the other determining factors of the car. No one really wants to buy a car that has been through too much. A used car with low mileage but however, it is a gold mine in the second-hand market.
2. Brand – Certainly, there are some car brands can fetch a higher resale value than the others. The reason being is that some of these car brands are more popular in the eyes of Singaporeans and also because these car brands are more easy to maintain and more affordable. Local car dealers export more cars that have excellent reliability and usually these car brands belong to the “Japanese and Korean made” category. These car brands are the likes of Toyota, Honda, Mitsubishi, Kia and Hyundai.
3. Condition – Taking care of your car will definitely helps in the resale value and this includes timely servicing and maintenance but most importantly, accident free. You may ask what if there’s minor bumps or scratches to the body and paintwork, well, this will not significantly affect the resale value but nonetheless, it is still recommended that you should keep the body and paintwork well-maintained in order to sell your car at high price.
4. Supply and Demand – Supply and demand for cars dictate their residual value. Vehicles that were made in limited numbers and special edition vehicles that had limited output compared to their demand get bonus points in the used car market. Interestingly, some options can do this, too, depending on their demand. Certain cars, like sports cars, can be worth more if equipped with a manual rather than an automatic transmission. On the other hand, automatic-equipped mass-market cars are more appealing to the general public shopping used cars and are worth more than if it had a manual.
5. Customization – Your goal in customizing your car is to make it more you and in doing so, you are somehow restricting someone else from owning it. For example, repainting your car to a bright neon colour of your liking could definitely affect potential buyers who are not fond of neon colours and frankly, neon is not really for everyone. If you want to resell it used one day, you would be wise to stick to a more neutral colour that will appeal to more people.
If you are planning to sell your used car in Singapore you can never really avoid depreciation, however, you can do something to keep your car’s resale value close to its original price. Just keep in mind that the less a car resembles the stock version from the manufacturer’s factory, the lower your resale value will be.
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