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Managing Car Expenses in an Economic Downturn: Depreciation

Managing Car Expenses in an Economic Downturn: Depreciation

There are plenty of sneaky hidden costs that plenty of people don’t consider before they buy a car. From stamp duty to initial registration and comprehensive insurance, there’s so much that gets forgotten in the race to get behind the wheel. But the king of them all is depreciation. A measure of how much the resale value of your car falls each year, depreciation is the silent thief picking your pocket, taking as much as 30% off the value of a new in the first year alone. 

That can quickly add up. The average car owner loses roughly $70 per week to depreciation, putting your next car that much further out of reach every day. In a year that seems to be full of unfortunate surprises, you can’t afford an expense like that cutting into your funds. With the situation changing rapidly from week to week and month to month, it’s vital that drivers protect what matters most – their hip pocket. 

If you’re one of the financially savvy people who would rather have that $300 a month back in their pocket, Carbar has the solution. We bundle your costs into one easy to manage, flexible subscription. If you find you don’t need your wheels, simply give us two week’s notice and we’ll come and grab the car – you don’t even have to leave your house. Forget taking pictures, paying for advertising, answering calls and dealing with tyre-kickers and low ball offers. Save the thousands you could lose just trying to get a price you think is fair for your car and subscribe to Carbar. 

What exactly does depreciation mean for car owners?

Depreciation can have a huge impact on your wallet. At an average of $3600 per year it’s the largest ongoing cost a car owner has to meet – bigger than registration, insurance and maintenance put together. That would be hard enough to swallow at the best of times, but with COVID-19 biting it becomes downright unbearable. 

Not only is depreciation a significant ongoing expense, it’s also the least affected by use. Cars depreciate mostly based on age, with the amount you’re losing having more to do with how many years old it is and less to do with how many kilometres you put on the odometer (though this still affects resale value). While a vehicle that is tucked safely away in your garage isn’t incurring running costs like petrol or wear and tear that could require additional servicing and maintenance, the same can’t be said of depreciation. 

Figuring out your own depreciation is easy. As an example, let’s say you bought a new car last year for $10,000. You decide it’s time for an upgrade and want to trade in the vehicle. Your current car is valued at $8,000 – $2,000 less than the original purchase price, giving it a depreciation rate of 20%. 

The speed at which your car will decrease in value varies according to the make and model, but on average expect to lose roughly 15-17% per year for the first three years of ownership on a new car. 

Unlike real estate, cars are a depreciating asset. All cars (except the very rare, certain vintage, or precious few high-value models), will drop in value as time goes by, making depreciation a constant pressure. Shared ownership models solve this problem but at enormous cost – both financial and in robbing you of exclusive use of the car.  

How Carbar helps you eliminate more than just depreciation 

With all the benefits of ownership and none of the risk associated with holding onto a rapidly depreciating asset, Carbar is the best option for any Australian looking for a money-smart way to drive. With Carbar, you’ll enjoy exclusive use of your choice of vehicle, without having to worry about the process of selling it at a price that feels a lot like daylight robbery. 

Simply visit carbar.com.au, browse hundreds of new and late model used vehicles from manufacturers such as VW and Audi – and enjoy the flexibility of subscription. Forget about registration, insurance, roadside assistance, servicing and maintenance, Carbar covers all of that with one fixed weekly fee, including tyres!

Fix the costs of running your car with Carbar. To learn more about car subscription, browse our range of vehicles or join for free, visit carbar.com.au today. 

 

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