• There are many myths when it comes to used-car buying.
• The most common is the massive depreciation value acquired the moment a new car is bought.
• It's a good idea to consult online sites that list cars for sale.
• For more motoring stories, go to Wheels24.
When it comes to the used car market, myths abound! If there's one thing everyone needs to know about buying a vehicle in the used car market, it's to do your homework and gather as much data as possible.
Here are three of the most common myths about reselling your car – debunked!
Myth #1: The value of a new car drops by 40% the minute you drive it off the showroom floor.
This is not entirely true; yes, it does devalue – but certainly not by 40%. First and foremost, one needs to consider VAT. Regardless of which car you buy, the fact remains that the VAT is gone on any vehicle the moment you buy it. After that, cars typically depreciate by 1.7% per month (or 22% per annum). Remember: the higher the price, the higher the depreciation in Rand value.
READ | Pre-owned vehicles are cheaper but riskier: Questions to ask when buying a used car
Some cars hold their value better than others – three-year-old Volvo XC40 and XC60 models, for instance, are best-in-class when it comes to resale values. At the same time, one-year-old Volvos retain a presentable 87 to 90% of their Manufacturer Suggested Retail Price (MSRP). So, it is super important to do your market research before buying a car.
Myth #2: Spend money fixing your car before you sell it, as it will get you a better price.
This is also not entirely true; it depends on what you're fixing and how much those repairs cost. If the seats aren't in the best of nick, for instance, it will cost you an arm and a leg to reupholster them – and you're unlikely to recoup your money on a sale. On the other hand, items such as a cracked windscreen, tyre damage, or rim damage (which you may be able to claim from insurance) can make financial sense. Whatever you do, don't do a cheap and cheerful body repair; the professionals at car dealerships will pick this up immediately.
Myth #3: Refer to the book value of your car to price it right.
Not necessarily. This may work with a volume seller that's been around for a while, but it won't work for niche vehicles or brand new models. So-called "book value" only applies to cars that sell over a certain number of units. The numbers of niche cars – vehicles that are successful but are aimed at a select few customers – simply aren't sold in high enough volume to establish a meaningful book value. The Volvo V90 Cross Country is a typical example.
Brand new (2021) models from all the car companies are in the same boat.
Instead of relying on book value, consult online sites that list cars for sale. Search for your car variant with a similar mileage and registration year. This will give you a realistic indication of the current market pricing. Then – armed with that knowledge and fully informed about the three myths – you can happily sell your car.