People sell or trade in cars for many various reasons: scaling down, moving on up, trying to lessen the financial burden on a family or just plainly because they feel like it. But is there an optimum time to sell your car?
If you ask the economists – clever financial blokes for whom things are black or white only – they’ll tell you to buy a reliable, fuel efficient car that you can easily afford and drive it until the wheels come off.
Which probably is sound financial advice. On paper. But in the real world, cars are more than mere utility liabilities (things that only costs money, but you need it). Truth is, even with most modern cars being far more reliable than ever before, many become financially burdensome because of crazy maintenance costs after service plans expire. Also, when your cosy little household of 3 suddenly expands to 5, your tiny Korean hatchback is not going to cut the cheese anymore, now is it?
Here is our opinion on when to sell your car:
Get rid of your expensive car. Period. Apart from the monthly instalments, the insurance premiums and depreciation are not going to get better any time soon. Even if you are likely to take a knock because of a higher amount still owed to the financier than the car is worth, in the medium term you are going to win and stay out of trouble. Do the math and if you are not sure how to, ask someone who can. Many ethical car buying companies and dealerships can also assist you with this decision.
If you are financially stable, and you reckon it’s time for a new shiny set of wheels, try to sell your car as close to the break-even point (when you can sell the car for as at least as much as you owe the financier) as possible. Depending on the mileage, this is a comfortable place to sell your car. If the mileage is still low, keep it for another few months, so you can earn a bit of a surplus to use as a deposit on your new car.
With the above in mind, another good time to sell your car is when there is at least a year left of its original factory warranty. When this warranty expires, the value of your car usually takes a bit of a nosedive. With most modern new cars, this is around the 3rd year of ownership. Buyers also look favourably at cars that still have a service or maintenance plan in place.
Try your best NOT to sell your car in the first 18 months of ownership (except in the case of #1 mentioned above). Cars lose up to 20% of their value the moment you drive if off the showroom floor, and you are bound to be on the losing side of this transaction.
Sell your car if your travelling needs or conditions change and your current car is not ideally suited. Apart from the obvious growing or shrinking of your household, holding on to your low-slung sports sedan with the run-flat tyres when you move to a country house with a rocky dirt access road or piling high mileage on your big SUV for work is just likely to ruin the vehicle’s resale value. Sell it and get something applicable as soon as you can.
There you have it. 5 simple things to remember when you want to sell your car.