How to Buy a Car with Resale in Mind
This post originally published on 8/25/2015 on the Allstate Blog by Brendan
Imagine you’re in the market for a car, but perhaps not one that you’ll keep long-term. No worries. It’s possible to get a great deal now and sell for maximum value later — if you plan accordingly.
The first question to sort out: Should you buy a new car or a used one? That answer depends on how long you plan to own the vehicle, says Oren Weintraub, founder and CEO of Authority Auto, a Sherman Oaks, California,-based car-buying consulting agency.
The simple formula for deciding between a new and used vehicle, according to Weintraub: If you’re going to hold onto to the car for three-and-a-half years or longer, a brand new vehicle is fine because financing will work in your favor — you’ll generally either break even or earn equity. If it’s likely that you’ll sell the car within three years, then getting a used vehicle may be the better option.
If you buy a used, or pre-owned, car you can avoid the depreciation of the first two years of ownership (typically when the value drops the most).
Consider these six additional things as you shop for a new or used car while keeping resale value front-of-mind:
1. Buy a popular model.
If you get a car that’s too niche, it may be harder to sell it in the future. “Fewer people are going to be interested, and the car will likely take a bigger depreciation,” says Weintraub. “Think about what brands won’t depreciate as much.”
2. Choose a standard color.
It pays to go plain. Silver, white, and black are the three most popular car colors for buyers, according to Kelley Blue Book. “If you buy a green car, fewer people might be interested,” says Weintraub.
Once you own the car, resist the urge to repaint it. “That affects the value of a car poorly, especially if the paint job isn’t good,” says Weintraub.
3. Avoid manual transmission cars.
Fewer people drive stick-shift cars these days thanks to car manufacturers building fewer and fewer of them, according to Fox News. Look for automatic transmission.
4. Mind the miles.
The standard number of miles on a 3-year-old car is 36,000, says Weintraub. Avoid a 3-year-old car that already has 50,000 miles on it. But if you purchase a car with more than the standard mileage on it, you’ll want to adjust your driving habits to limit the miles you add so the resale value doesn’t drop. If you drive more than the average, find a 3-year-old used car whose mileage is significantly below 36,000 miles.
5. Don’t skimp on repairs.
Let’s say you get a flat tire. Replacing a good-quality tire with a cheap one will result in a mismatched set that may affect the resale value, said Jack Nerad, executive editorial director and executive marketing analyst, to autoblog.com. Also, if you get into a fender-bender and your car needs bodywork done, make sure to go to a reputable company. “I’ve seen some touch-up jobs that have really ruined the value of the car,” says Weintraub.
6. Save some warranty.
Warranties typically transfer over to the new buyer. If your vehicle still has a warranty, you may want to try to sell the car before the contract runs out. “That’s something that buyers will find appealing, and they may pay a little more for the car,” says Weintraub.