George Kamel: 3 Ways To Reduce Your Car’s Rate of Depreciation

Andrea Norris

According to money expert George Kamel, a brand-new car loses 9% of its value — also known as depreciation — the moment you drive away from the dealership. That’s $3,240 on a $36,000 car. By year six, your vehicle will lose about 60% of its original value.

However, in an Instagram post, Kamel shared a few simple strategies can help you keep more of your vehicle’s value intact — ultimately impacting your personal finances. Read on for his top three recommendations for reducing your car’s depreciation rate.

Also here are six specific cars that are plummeting in value.

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3 Tips for Reducing Your Car’s Depreciation

A car is a significant investment. These tips can help ensure you recoup as much money as possible when you sell.

Keep Your Car’s Mileage Down

The more miles a car has, the less it’s typically worth, according to CarExamer.com. The average driver puts 12,000 to 15,000 miles on their vehicle annually. So, driving your car less than 12,000 miles a year can help retain more of its value.

Additionally, mileage increases a car’s depreciation after the odometer surpasses 60,000 miles. Beyond 100,000 miles, mileage can cause a significant value drop. The fewer miles your vehicle has when you’re ready to sell or trade it, the more you may get for it.

To keep mileage in check, Kamel recommended consolidating errands into one weekly trip and carpooling to work. Walking, biking or public transit can also keep your car’s mileage low.

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Follow Your Car’s Maintenance Schedule

Kamel said, “It’s the little things that make a big difference when it comes to car maintenance.”

Consider the impact of a simple oil change. CarFax estimates a 2014 Ford F150 XL with a history of regular oil changes is worth $1,320 more than the same truck with no history of service records.

According to Kelly Blue Book, some of the maintenance and repair tasks that can help retain and possibly add to your car’s value include the following:

  • Tune-ups and oil changes

  • Transmission fluid and coolant flushes

  • Air conditioning and brake maintenance

  • New tires and alignments

  • Car detailing and cleaning

  • Exterior dent removal

Routine maintenance might seem like an extra expense, but it can prevent minor issues from becoming expensive major problems. Even if your car appears to be running fine, keeping up with the manufacturer’s maintenance recommendations is a wise investment.

Buy Reliable, Gently Used Cars

Kamel is a “huge fan of buying used, reliable cars — with cash” because new cars depreciate much faster than used vehicles.

Generally, if you buy a brand-new car, its value depreciates 20% the first year you own it and then 5% to 10% annually over the next five years, according to CapitalOne Auto Navigator. By year six, many cars lose 50% to 60% of their original value.

Buying a used car rather than a new one can help you avoid the steepest part of the depreciation curve. If you can find a well-maintained, low-mileage vehicle older than five years, you can minimize depreciation loss even further. Consumer Reports recommends buying a certified pre-owned car to split the difference between new and used. These cars are often three-year lease returns that come with extended warranties.

Kamel recommended buying a car with cash to avoid years of loan payments on a vehicle that is dropping in value. Thanks to new car depreciation and long loan terms, some drivers owe more to the lender than their car is worth, according to LendingTree.

Kamel also advises doing some research before buying [1]. Some car makes and models hold their value better than others.

Reducing Depreciation and Car Ownership Costs

Kamel’s tips are specifically for slowing depreciation and preserving your car’s value. However, they can also help you save on ownership costs.

Regular maintenance can help prevent costly repairs that may result when you forgo your car manufacturer’s recommended service tasks. Consider again the example of regular oil changes. An oil and filter change typically runs anywhere from $35 to $125, depending on the type of oil and the shop, according to Kelley Blue Book.

Skipping oil changes could lead to extensive engine damage over time and a $2,500 to $4,000 engine replacement, as explained by CoPilot, an AI assisted car buying app. That’s assuming you buy a used engine. A new engine — or a new car — will cost you considerably more and it’s not likely to improve your car’s value.

You can also delay the need and cost of repairs by driving less and keeping mileage low, a habit that will save you money on gas, too.

Finally, buying used rather than new often means a shorter loan term, saving you on loan interest. It can also help you avoid an upside-down auto loan — when you owe more than the car’s value — and the need for gap insurance. If you really want to save, take Kamel’s advice and buy a gently used car with cash.

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This article originally appeared on GOBankingRates.com: George Kamel: 3 Ways To Reduce Your Car’s Rate of Depreciation

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