Personal Finance 101: Car Resale Value is important! Right? Which car depreciates least?

Personal Finance 101: Car Resale Value is important! Right? Which car depreciates least?

Do you buy your car based on how much it depreciates?

Actually, the day we receive our car and we drive it out of the showroom, it has depreciated in price. If someone told me they have just received their car a few weeks ago and has only driven it less than a few hundred kilometres and wants to sell to me at the same price they bought, I will politely say this, “better to sell to others. I still have a car to use.” After saying this, I will go and order a new car instead. If indeed I wanted to buy a new car.

However, if they were to offer me a 10 percent discount instead and it’s just a few weeks’ old, then this is possible for me. What about you then?  Do you buy cars based on how much they depreciate? Let’s see how much a favourite car for many Malaysians actually depreciate after 5 years. As per the below chart, 5 years later, the car would have appreciated by 50 percent.

Article in carsome.my As per information from carsome, a new Perodua Myvi will lose 50 percent of its value in 5 years. Please refer to the chart below.

When it comes to depreciation, is it the actual price or the percentage?

Assuming we paid RM100,000 for the car and then 5 years later, the price has fallen by 40 percent. Do we say this: “You see, my car after 5 years only depreciated by 40 percent. I can still sell for RM60,000. Meanwhile that Myvi shown above has already depreciated by 50 percent and can only be sold at RM27,650.”

Erm… 40 percent lower looks better than 50 percent lower. However, in actual loss, it meant the person has lost RM40,000 yeah. RM100,000 minus 40 percent depreciation.

Meanwhile the Myvi has lost 50 percent or equivalent to RM27,650. I am not a Math expert but I can immediately know who has lost more money and who has lost less money yeah. Skip the percentage sales talk yeah. When it comes to losing money, stay focused on actual loss. The percentage is not a good measure in this case. This is why financial management is very important and percentage versus the actual price must also be taken into the right context when we are making decisions too.

Please strive to buy a car and does not need to worry about the depreciation at all

I always think all of us should just strive to be rich enough that our decision to buy is just based on how much we like the car and nothing else. It’s like going for a holiday and choosing a destination we like versus compromising on the destination so that it’s within our budget, right? At this stage, I still belong to the category of watching my budget. Alternatively, focus on be happy with any car. That may work too, at least in the mean time.

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