When is the best time to sell a car?
You may not consider the resale value of your car when you first buy it. But after you’ve owned it for a few months or years, it can become a significant factor which shouldn’t be ignored.
It’s a fact that a car is a financial investment. And it remains so until the moment it’s sold and you have the funds in your account ready to go towards another vehicle.
But how do you work out precisely when is the best time to sell your car?
The depreciation factor
Depreciation starts the moment you drive the car off the forecourt. Different vehicles depreciate at different rates and it’s difficult to precisely know how much a car will be worth in, say, 12 months.
However, there are some key points that you can keep in mind. New cars lose value much faster than used cars. It’s usually between 15%-30% in the first year. This can exceed 50% over the course of three years.
To make the most of a new car, you may want to keep it for as long as you can. It’s unlikely to be financially viable to sell it after the first or second year it’s been on the road.
If you’re driving a used car, since a large chunk of depreciation is already knocked off, you’ll be competing with other used cars. Make sure your car is immaculately maintained so you can slow down depreciation until you decide it’s time for a new motor.
Depreciation can really come back to bite you if you end up in a situation where your new car is stolen or declared a write off. Insurers will usually only pay out on the current value of the car and not the amount you originally paid for it. This means you’ll be out of pocket for any depreciation.
The good news is, gap insurance can protect against depreciation by making up the difference between the current value and original price paid. It’s only suited for new or second-hand cars up to 10 years old but it could help soften the financial blow.
Sell it when it no longer serves its purpose
If you don’t always have to drive the flashiest, newest car and depreciation isn’t a concern for you, a key factor to selling your car at the right time would be if your personal circumstances change and the car is no longer suitable.
Are you thinking of starting a family, for example? It might be a good idea to think of an appropriate replacement for your car.
Many drivers enjoy their cars and return on their investment isn’t really what they are looking for. If you aren’t enjoying your car anymore and you have an eye for a new one, then that might be the best time to sell it.
Any money you make back can go towards a new one. Something to keep in mind is that, if the car is still on finance, it is illegal to knowingly sell it without informing the buyer of the situation.
Does seasonality really matter?
Yes it does, and it’s probably one of the most important factors. Different events, holidays, seasons, they all play a key role to finding the optimal time to sell.
During the spring and the summer months, convertibles sell for a higher price. As temperatures rise, the demand for classics, roadsters, and sports cars goes up.
Autumn and winter make 4x4s, off-roaders and SUVs more attractive. Motors that would go into that category include Nissan Qashqai, Skoda Yeti, Kia Sportage and BMW X5.
A lot of used cars come on to the market in September and March as people trade up to the new-registration vehicles issued in those months – so it could be worth selling slightly earlier to avoid the increased competition.
A car makes a great gift so holidays and special events (e.g. graduation, Christmas) affect demand and you should plan your timing and take advantage of these.
Selling your car at the most appropriate time of the year would hugely increase your chances of attracting potential buyers.