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Buying a Car: How Do You Avoid a Car With Severe Depreciation?

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author photo by Doug DeMuro November 2016

Like many car shoppers, you probably take depreciation into account when you're buying a car. After all, nobody wants to buy a new vehicle and discover that it has lost a huge percentage of its value after only one or two years. But how do you avoid buying a car with severe depreciation? It's not easy -- but we've rounded up a few tips.

Check Resale Value Accolades

One easy way to avoid purchasing a car with poor resale value is to instead buy one with excellent resale value. And the easiest way to do that is to check resale value accolades and awards for vehicles that boast the best overall resale values.

Several firms provide such awards, but we're partial to the ones from Kelley Blue Book, which project depreciation over a 5-year ownership period. Kelley Blue Book's awards, dubbed simply the "Best Resale Value Awards," come out annually in December and list vehicles with the best resale value by segment (such as "luxury car," "full-size crossover," etc.), overall vehicle and brand. If you buy a car on Kelley Blue Book's list, you're almost certain to end up with one that will hold its value well.

Avoid Old Designs and Heavy Discounts

Another way to avoid substantial depreciation: Don't buy a car with an older design. Although this isn't always a steadfast rule (the Chevy Camaro and Jeep Wrangler both touted excellent resale values in Kelley Blue Book's last round of awards, even though they have older designs), it generally holds true: A car with an older shape that will soon be replaced is likely to see its depreciation accelerate once a replacement model comes out.

Vehicles with heavy discounts and manufacturer incentives are also likely to lose a lot of value. If a vehicle is being offered with zero-percent financing for seven or eight years, it's probably because too many units were produced and sales aren't brisk -- and that means resale value won't be very good. It's the same story if you see a vehicle available with a huge cash-back offer or a lease payment that seems too good to be true.

Check Older Examples

Our last piece of advice for avoiding heavy depreciation: Visit Autotrader listings and check out asking prices for older examples of the car you're considering. If you're interested in a Chevy Malibu, for instance, check out the average asking price of 3-year-old Malibu models -- and then check the value of rivals like the Toyota Camry and Honda Accord. Although new models aren't always guaranteed to mimic the depreciation of older vehicles, this will help paint a clearer picture of depreciation for the model you want.

Depreciation is important, and it's good to try to avoid it when you're buying a car -- especially a brand-new model. Follow our advice and your car will be worth a little more when the time comes to sell it.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
Buying a Car: How Do You Avoid a Car With Severe Depreciation? - Autotrader