What is vehicle depreciation and how does it affect your vehicle?

Whether it’s a house, car, or anything you plan on selling in the future, you’ve probably heard the popular term “depreciation.” While this may sound like a financial mumbo jumbo term, depreciation actually directly affects your resale value. While you’ve probably heard the term tossed around car dealerships time and time again, do you really know what vehicle depreciation is? If you’re wondering what exactly this metric measures and means for your trade in, you’re also in luck! Toyota of Orlando is here to help make sense of all the accounting complexity.

The 411 on vehicle depreciation

At Toyota of Orlando, and other car dealerships, vehicle depreciation plays a big role into how much return you’ll get on your used car when trading it in and how much your new car will be worth after a certain period of time. While it applies to many different things today, the history behind depreciation is very surprising. In the 19^th century, rail road companies created the metric to assign a value for use of an item over a period of time to show more profit for their company.

Essentially, vehicle depreciation details a person’s use of an Orlando Toyota vehicle over time and how that affects its overall return value. There are several ways in which depreciation occurs to Orlando Toyota vehicles including:

Updating technology and new vehicles

When a new model year Orlando Toyota vehicle is released, the amount of vehicle depreciation on older vehicles increases. This happens because modern vehicles become more desirable over older models.

Perception of the Orlando Toyota vehicle

A vehicle’s popularity and desirability can also cause it to have more or less vehicle depreciation. For example, more luxury models, SUVs, and trucks have higher resale value than sedans. Classic and collector vehicles are some that experience an increase in resale value as time progresses rather than experiencing typical depreciation.

The value of your vehicle decreases when you drive off the lot

When it comes to purchasing a new Orlando Toyota vehicle its price includes several things like tax, title, and dealership fees. Essentially, you’re paying more for the vehicle during your purchase and some of that money can’t be returned during your trade in later on. Plus, the value of your car decreases the moment you sign on the dotted line and drive off the lot. This happens because the vehicle gains a new owner, starts to get mileage on its odometer, and becomes worn.

To make sure your vehicle doesn’t endure a large amount of depreciation, make sure to only accumulate 10,000 miles per year on the odometer and stay up to date on regularly scheduled maintenance. If it’s possible, try to purchase a newer vehicle with improved safety technology as these will likely hold value over the first years of ownership.

Leasing a vehicle from Toyota of Orlando is another way to mitigate the effects of vehicle depreciation. If you have questions about depreciation or purchasing a vehicle, give us a call at (407) 298 – 4500 today!