When you’re ready to sell your car or trade it in for a new model, you’ll discover that your car is no longer worth anywhere near what you paid for it. The reason? Depreciation. That’s the name for it when your car loses value over time due to normal wear and tear. It takes a toll, as does any other, more serious damage to your car.
Before you sell or trade in your car, there are ways that you can increase its resale value — even if you’ve already made it a point to keep your car in pretty good condition. These tips can help you get more money for your vehicle. That way, you put extra cash in your pocket and you get a bigger trade-in credit toward buying a new car.
Related: Does loan purpose matter?
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What Is the Resale Value of a Car?
Your car’s resale value is the amount it’s worth if you were to sell it in its current condition. The state your vehicle is in will have a big impact on its value. A car with 100,000 miles on it, dents in the bumper, and a loud muffler will be worth less than the same vehicle with 30,000 miles on it that’s received a lot of TLC: kept in a garage and only driven occasionally. The make and model of a car will also be a determining factor. For example, luxury cars and SUVs are cars that increase in value.
You can get an idea of your car’s resale value through online resources like Kelly Blue Book and Edmunds.
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How Your Car’s Value Is Determined
There are a number of factors that help determine your car’s value.
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1. Popularity of Make and Model
Some car makes and models are just more popular than others. They may be seen as more dependable, for example. As a result, the laws of supply and demand can drive up resale values. If you have a car a lot of people want, resale value will be higher than for cars that are easy to come by.
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2. Trim
The trim level of a vehicle refers to the different available versions of a model. The higher the trim level, the more bells and whistles the vehicle has. This ranges from better fabrics on the seat to engine type. It will also help your car retain its value.
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3. Mileage
How many miles you’ve put on your car, aka your odometer reading, is one of the biggest factors that affects depreciation. On average, people drive their cars about 15,000 miles per year, and the more you drive, the less appealing your car will be to potential buyers.
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4. Age
The older your car is, the lower its resale value. That’s because buyers assume a certain amount of wear and tear and mileage.
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5. Safety
Safety features like blind spot detection and collision warnings can help drive demand for a make and model of a car, increasing its resale value.
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6. Accident History
A car that’s been in an accident — even a minor accident — will be worth less. Accidents and repairs show up in a vehicle’s history report. And even if the repairs were made by a professional and are completely unnoticeable, many drivers will still choose a car with a pristine driving history.
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7. Condition
When someone values your car, it will be classified as in excellent, good, fair, or poor condition. Most cars fall into the good or fair category, meaning they have been maintained well and require few repairs. The higher your car scores on this metric, the more it will be worth.
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Three Tips for Increasing the Value of Your Car
How to increase car value? While you drive your vehicle, maintaining its value requires effort on your part. However, doing so will also help ensure you drive the safest car possible and that you’re able to resell it at a fair price when the time comes.
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1. Keep Up With Routine Maintenance
Routine oil changes and service checks can help you stay ahead of small problems that might become big, expensive problems down the road. This is key to how to increase value of car.
These prevention measures help make sure that all parts of your car are running smoothly for as long as possible. What’s more, a detailed service record can also help boost your car’s value. (In fact, it’s important to save all documentation about your vehicle, from the paperwork you received when you first bought the car to insurance claims.)
Maintenance costs vary depending on the make and model of your car, and you can actually research them online before you even make your initial purchase at websites like Edmunds or Consumer Reports.
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2. Pay Special Attention to Tires
Rotate, balance, and align your tires regularly to avoid wear on your car. And if your tires are looking worn when it’s nearing time to sell, investing in a new set can help boost the value.
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3. Make Repairs a Priority
If you’ve been driving your car around with some minor damage that doesn’t bother you, like a dented bumper or a broken tail light, consider making those repairs before you sell. Even minor damage can quickly reduce resale value, and it might be the make-or-break factor when a buyer is making their choice.
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Does a New Engine Increase the Value of My Car?
There are also some modifications you can do that should boost your car value. A new engine does increase the value of your car, especially if it didn’t have a working engine before.
That said, a replaced engine may raise questions among potential buyers. Engines are supposed to last the life of a car. If they don’t, potential buyers may wonder whether the car has been in an accident, if there is something wrong with the car in general, or if the engine was replaced by someone qualified to make that kind of repair.
These questions may be enough to spook buyers. So, if your engine just has normal wear and tear, you may want to think twice about replacing it.
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What to Do After Increasing the Value of Your Car
OK, you managed to increase the value of your car. Congrats. This can help you achieve a higher price when you sell or increase your trade-in value if you want to put your old vehicle to use toward the purchase of a new one.
It can also make it easier for you if you ever pursue auto loan refinancing. The more your vehicle is worth, the more likely you will be able to find a lender who will offer you a loan. When you refinance, you take out a new loan — one with better terms or lower interest rates — that you use to pay off your old loan. When is the right time to refinance a car? If your credit score has improved or interest rates are down, you may want to consider refinancing.
The rewards of an auto loan refinancing include a lower monthly payment or lower interest rates, better terms, and you may free up some cash you can use for other financial goals. There are tips to auto loan refinancing to help guide you.
That said, there are potential downsides to consider. You may be hit with prepayment penalties, for example, and you should carefully weigh the cost to refinance an auto loan to ensure it ultimately pays off.
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3 Auto Loan Refi Tips
- Refinancing your auto loan could lead to lower monthly car payments and more money in your budget.
- Shortening the term of your auto loan may increase your monthly payments, but you’ll likely pay less in interest over the life of the loan.
- You may have trouble refinancing the loan on a car that is worth less than what you owe. For more info, check out When Is the Right Time to Refinance a Car?
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