Whether it’s time for a new upgrade or time to let go, most would go for selling their cars or trading it in for better cars. Understandably, you would want to get the most out of it while you can, as you have spent a large sum of money on it already. However, just like investment, the timing is crucial. Here are some tips to help you decide when it is the right time for you to sell your car.
Find out your car’s inflection point
Much to our dismay, all cars depreciate, regardless of the brand. Some may depreciate slower than others, depending how long they have been on the market, some might even depreciate up to 10%! This depreciation will continue at a rate of 15-25% every year, downsizing your car’s value. Hence, when you want to sell your car, make sure the value of your car is at the highest before it reaches its inflection point.
But wait, what’s inflection? It’s a big drop in depreciation, after which the depreciation rate slows. Let’s use an example. A Mercedes Benz C-class depreciates after the first year of ownership but it would have another drop in the fifth year. After that, depreciation then speeds up until the eighth year, when another big drop in value happens. So from the pattern shown, the best time to sell is before the drop, which is when the car is around 4 or 7 years old.
To summarize, the plan is to know the worth of your car, as well as the market value for it.
Warranty period
As you know, every car has a warranty, however, for pre-owned cars, the warranty may vary. Some cover one to two years, while some go up to 3 to 5, and some warranties only cover the engine and gearbox. After the warranty expires, your car would no longer be covered for, and you would be responsible to replace any damaged parts. So, it is better to sell your car when the warranty expires, as it can save you huge sums of money for any potential maintenance or repair costs.
Clear your outstanding loans
Paying off any outstanding loan on your car before selling it would be a good start, and you should sell your car at a higher price so you could earn some extra cash for your next car upgrade.
However, if you are one of the unlucky ones that couldn’t keep up with payments, you should sell off your car to pay off most of it, even if it turns out to be a loss. Defaulting can damage your financial options in the future, such as taking out loans.
Find out when new models come out
Like most advanced techs, cars get updated often. Demands for the older versions drop, as buyers go crazy for the brand new models with the latest gadgets and safety features. However, when demand drops, so does the price, so it’s best if you sell your car before a new model is released, to get the most out of your car.
On average, there is a gap of 5 to 6 years between every launch of a new model. To go along with car warranties that usually last for 5 years, you can sell your car before the warranty expires! If that’s not a great plan, I don’t know what is.
To ensure you get back what your car is worth, you can always hire a professional to inspect your car and determine your car’s value.
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