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Residual Value, Depreciation and Your Used Car

Whether you realize it or not, a vehicle’s residual value should have a large effect on your used car shopping. Everyone knows a brand-new car can lose more than 30 percent of its value in its first year – it’s why smart shoppers buy used – but what about the remaining fraction? What a car retains in worth is called residual value. Understanding how certain factors add or detract from that worth can help you get the absolute most out of your used car both at buying time and when it comes time to send the vehicle on its way.

Residual Value is just the opposite of depreciation. That is, what your car looses in value over time is defined as depreciation and what it retains is called residual value. While these terms are often associated with leasing, they’re just as pivotal to the used-car buying process. So what determines how much a car keeps or looses over time? Loan officers use complex formulas to determine a vehicle’s depreciation based on innumerable factors that decide how much a vehicle looses in a typical year of use. Rather than slog through all of those, let’s take a look at the four most prominent portions of depreciation in no particular order.

Age

Like it or not, every car loses some percentage of its value as time passes. The funny thing is, the amount of that loss changes over time so long as the rest of the factors on our list stay within acceptable parameters. In the first few years, a car stands to lose the largest portion of its value, but by year three the level of depreciation levels off somewhat.

How does that effect your used-car buying? While it’s tempting to jump in on a used model from this or last year to get all of the great tech and advancements manufacturers boast about, those vehicles still have a substantial amount of depreciation to go through. That is, their residual value will continue to plummet after you sign the title. Some buyers may see that as the price you pay for the latest and greatest, but if you aren’t careful, you could wind up owing more on your car loan than the vehicle is actually worth. Not a good spot to be in.

Mileage

In general, anywhere from 10,000 to 30,000 miles is an acceptable amount of mileage for a vehicle to accrue per year. Anything less than that and whatever vehicle you’re interested in will have likely depreciated less than its higher mileage counterpart. Of course, the flip-side of that coin is cars that have amassed more than 30,000 miles per year will be worth less.

Why does mileage matter so much? Every part on a vehicle has a life expectancy, usually measured in terms of miles. The more time a car or truck has spent on the road, the more of that life expectancy has been used up. Even if a car is relatively new, higher miles mean you can expect to replace more parts of the vehicle sooner than its low-mileage brother.

Vehicle Make

This one has as much to do with individual automakers’ performance in terms of reliability and build quality as it does the public’s perception of those attributes. Typically, Japanese and German makes fare better than their domestic counterparts in returning higher residual value. It’s true that by and large, carmakers like Honda, Toyota, BMW and Mercedes-Benz have built their names on high-quality, long-lasting vehicles, and those reputations play a huge role in how much buyers are willing to pay for used versions.

At the same time, General Motors, Ford and Chrysler have all made huge advances in terms of quality and reliability. Unfortunately, those companies’ reputation for building vehicles that don’t last as long as their import counterparts still haunts them today, resulting in lower average residual value. That means if you’re careful, you can find great domestic-made used vehicles with plenty of life left in them for far less than a similar import model.

Vehicle Type

Not too long ago, it was nearly impossible to find a good, used SUV for a smart deal. Now, with last summer’s astronomical gas prices and a new focus on green cars and trucks, driving a big body-on-frame SUV is as unpopular as it is impractical. The result is a surplus of used SUVs and truckish people-movers that would have been the envy of the neighborhood not five years ago. Needless to say, those SUV’s have suffered rapid depreciation due to a change in buyer tastes.

It’s important to keep an eye out for these trends when you’re picking up your next used vehicle. It may be tempting to jump into a particular type of car or truck because of a great deal on the window, but doing so could put you into transportation you can’t easily get rid of when it comes time to upgrade in a few years. If a car or truck has depreciated significantly in a short period of time, you may be better off looking for something else.

Used car market in India is growing rapidly with the growth of new car market. In the present era most of the car owners especially young drivers drive a particular car for about three to five years and then exchange their used car for a new car. This has not only given a boom to the new car market but has also fostered the used car market in the country.

When it comes to buying a second hand car in India there are many options open for buyers both in terms of used cars and used car sellers. There are many used cars for sale in India and many dealers that offer the best used cars at a cost-effective price. If anyone wants to buy used car in India then there are certain things one should know to get a perfect pre-owned car.

Here are top 10 tips to buy used car in India:

In the first place you have to decide which car you exactly want and what the price you can pay for it.  The choice of car depends on your needs and requirements. If you are a family of two then a small car like Alto and Spark will be best for you but if you have a huge family of 7 or 8 people then a MUV like Toyota Innova is a good option for you. Analyze your needs before you fix on your used car. Then you have to do a market research on the used car that you decide to buy. You should be well aware of the car’s market value, its resale value, and its reliability as well as demand in the market. After that you need to check the source through which you can buy the second hand car with ease. There are higher chances of getting fleeced when buying a used car and therefore you should be cautious and choose a source that you can rely on. You can select the internet where you can find many Indian car portals that offer a good opportunity to buy used car in India with a hassle free process. Then you have a number of authorized dealer and personal referrals. Many big brands like Maruti, Toyota, Honda, and Hyundai also have their used car outlets that offer you warranties, car finance, car insurance, and quality service on used cars. You can judge yourself what is the best option for you. Then you have to think as to whether you are capable to make the entire payment or whether you will take car loan for used car. There are many financing companies so you need to check the interest rate that they offer and choose the best one for yourself. Once you get some of the best sources to check for used cars you can contact them and have a test drive of few of the selected car models. There are many second hand cars in India and you cannot obviously test drive all. So choose few of the models that you desire to own. While testing and verifying the car check the entire history of the car and also evaluate the condition, mileage and performance. Never go for buying a modified car or a repainted car. Then check all the documents of the car that you decide to buy. Check the RTO tax receipt, original registration certificate, insurance papers, original invoice, and the service bills of the car. Don’t forget to tally the VIN number of the car with the one mentioned in the registration certification. This will help to verify whether the car and the seller are authentic. In Indian used car market there are chances of getting cheated so be cautious and don’t end up buying a stolen car. Most of the cars that are stolen in India usually have the odometer tampered. It is a very common malpractice in the used car market. Check the date of tyre manufacturer and the service records to ensure that the odometer is not tampered. If you don’t have much knowledge on cars then ask a mechanic to do so. Have a trusted mechanic look at the car and check the overall condition of the car. Once you are satisfied with the working and condition of the car finalize the deal with the seller.

10. Negotiate to your best to get the best deal and then complete all the paper work and legal formalities.

A used Chevrolet Tracker combines a smaller SUV and the power of a V6 engine that is well trusted. There are several used four-door models available at used car dealerships that offer the strength and durability of a classic Chevy Truck. It is a vehicle that is adaptable and one that lends itself to active life style.

The Tracker is still offering its owner the ability to tackle almost any task, from the daily urban travel right up to an off road adventure, this is a true sport utility that can perform on the road and on the land.

Like all used Chevy vehicles the Tracker begins with a solid foundation, the steel frame which is built under the Tracker gives it an excellent smooth and comfortable operation on the road and the ability to go almost anywhere the driver wants to take it. Its chassis and high distance from the ground giving the Tracker many advantages for off-road use over its competitors who employ a construction of chassis and bodywork, more commonly used for cars not real on-road, off-road used utility vehicles.

A used Chevy Tracker is a strong and long lasting used auto in which you can place your trust. Precision hydraulic rack and pinion is the root of its very safe performance, its rear suspension of high sensitivity with a design with five links is intended to provide a unique perception of firmness and control in the turns.

A pre-owned Tracker offers consumers utility, performance, competence, value, style and all at a reasonable price. A used auto dealer may be able to offer the Tracker in either two-wheel or four wheel-drive options depending on which used vehicle version is available.

The Tracker provides the essential power for those who want to buy a used car, but would perhaps like the added usefulness of a used SUV. All models offer as standard equipment a powerful V-6 engine from 2.5L DOHC, 24 valves that generates 165 horsepower while providing an exceptionally good level of fuel efficiency.

A used Tracker also includes as standard AM / FM radio and CD player, plus air conditioning, rack and pinion steering, folding rear seat and transfer box with changes on progress in the model four-wheel-drive. The Tracker LT models add electric locking doors and much more good value used vehicle options.

The used Tracker has had three separate generations of used vehicles the second generation is the five-door version of the used Tracker. Its range of gasoline engines is composed of engines 1.3, 1.6, 2.0 and 2.5L engine capacity.

The third generation (2005-present) both bodies of the third generation used vehicle models went on sale in late 200. It is totally different from the second generation, is much bigger, and shares the platform with the General Motors bigger SUVs. The Grand used Trackers 4×4 system has a four-wheel traction. The three-door version is approved for four passengers, while the five-door has five seats.

This flexible and highly adaptable used vehicle is very popular and sought after on used auto dealerships lots; seek one out for a first class used vehicle driving experience.