Used car values impact everyone on the roads. You may not realize it, but the average value of these vehicles affects all of your future auto purchases - so you should be paying attention. Whether you stick to purchasing used cars every few years or want to trade-in your current ride for a new vehicle in the near future, you'll need to be aware of a few details that affect the bottom line.
Supply and demand
The NADA Used Car Guide recently released a report explaining that used cars are holding their value. In the current market, there's a lot of demand for high-quality used cars, but the supply is a little tight. So even though transaction prices have fallen slightly - a seasonal trend that the organization expects to continue this December - there are many opportunities for drivers.
"Usually wholesale auction volume decreases during this time of year - and it did, again. This time, however, it fell even a bit more than normal," said Jonathan Banks, an executive analyst for the NADA Used Car Guide. "If there are less used vehicles in the marketplace, then competition increases, and values hold a little better as a result."
Why is this a good thing? For one, if drivers want to trade in their existing vehicle as they buy a newer model, they can get more for their ride. This helps defray the total cost of a purchase and could make the large down payment a bit more palatable.
Design matters
If you're concerned with the value of your current ride, it's smart to take a look at its design. The NADA Used Car Guide previously released a study on which factors would impact vehicle value in 2015. Along with some tried-and-true qualities, such as mileage, that play into the sticker price, the design of the vehicle also matters. The organization found that redesigns can have a dramatic impact on the bottom line.
"Let's say you have a 2-year-old car worth $20,000. Your neighbor has the same model of car as you, but his car is only a year old, and has gone through a newer, extensive redesign. Your neighbor's car would be worth $27,000 - or about 35 percent more than yours." Banks said. "The price of the newer, redesigned 1-year-old used car holds considerably more value due to the fresher, redesigned look over your car, even though the two cars are only a year apart from one another."
Additionally, the report noted a few other qualities that affect the price of used cars. Included in the list was fuel economy, horsepower and torque. These performance-related qualities even outpaced safety features and warranties, underscoring the fact that people want a car that will excel on the roads, not necessarily one with low-cost vehicle maintenance.
Care for your car
Ultimately, one of the best things you can do to keep money in your pocket is take care of your car. By sticking to scheduled maintenance and a tune-up schedule, you can take proactive measures to keep the automobile operating at a high level. This can also ensure the vehicle's power stays up to snuff, which is important to its value. Taking small actions to optimize fuel efficiency, such as getting a tire rotation or fuel injection cleaning, can also help the bottom line.
Smart buyers and car lots won't be fooled by a car that only looks good on the outside. By caring for what's under the hood, you can make sure your vehicle is retaining its value and helping your wallet in the long run.
"What Impacts Used Car Values?" (2014, December) Precision Tune Auto Care. Retrieved from: http://www.precisiontune.com/what-impacts-used-car-values