A flood of new car owners have hit the streets following this past Labor Day weekend. Based on the first 15 days in August, J.D. Power estimates that new vehicle sales reached 1.27 million units for the month – up 12 percent from the previous year and the highest level since before the recession.
A number of personal finance gurus advise against buying a brand new car – ever – but drivers are obviously ignoring this advice. Perhaps it's because the cost of financing a new car is so low; a gobankingrates.com auto loan rate study last month found the national average for new car loans is just 3.99 percent APR, while some local banks and credit unions charge as little as 0.99 percent APR.
So if you bucked the frugal option, accepting that a new car's value decreases by 11 percent on average as soon as the odometer rolls to "1," here are a few bad habits you can avoid to mitigate any further depreciation on your new vehicle:
1. Riding dirty. You might not mind skipping a few washes to make up for a big car payment, but everything from the elements, to salt on the road, to good ol’ bird poop will wear away a new car’s finish and detract from its overall resale value. New car owners should be mindful of dirt and grime that can build up – both inside and out – and opt for a wash (preferably by hand) every week or two and a full detail at least four times a year.
Jon Dulin of MoneySmartGuides.com says keeping a clean engine bay immensely improves your vehicle’s resale value. “Don’t take a hose to your engine, but take a wet rag and wipe off the dirt from the hoses and plastic coverings under the hood,” advises Dulin, adding, “Buyers see a super clean car and engine bay ... and will pay top dollar for the car.”
2. Driving hard. Some drivers are more aggressive than others, but the rush of sitting behind the driver’s seat of a brand new, powerful car is enough to give anyone a lead foot for the first few thousand miles. The problem is, these first miles are when new car owners need to be most gentle. While it’s rare for most modern cars to come with specific break-in instructions, it’s always recommended that drivers go easy on the gas, avoiding redlining or hard braking.
It’s also important to change the oil almost immediately. “That 20-mile oil, you would think, would look pretty much like fresh oil right out of the bottle. Wrong. It usually looks more like metal-flake paint, iridescent with tiny particles of metal worn off rubbing surfaces inside the new engines,” writes Mike Allen in Popular Mechanics. “After a few hours of operation, this completely normal phenomenon slows down as the rings, camshaft, lifters and bearings burnish their respective mating surfaces.”
3. Customizing your vehicle. Adding a body kit or exhaust system can personalize a vehicle, but will consequently reduce the pool of buyers interested in purchasing it when you’re ready to move on. Even worse, aftermarket modifications and accessories can interfere with a car’s warranty. Above all, car owners concerned with retaining value should steer clear of add-ons that alter powertrain or safety equipment.
4. Failing to keep records. The Car Connection recommends holding on to all of your service records, which can be especially valuable if you end up selling your car to a private buyer. By showing paperwork that proves the vehicle’s tires, oil and battery are in good condition, you have a better chance at selling the car and getting a good price.
5. Seeking service from a stranger. Bret Bodas, automotive expert and director of the automotive professional group at repairpal.com, says having unqualified technicians work on your car often ends up being an enormous drain on your wallet. “Though you may think you’re paying a little less, this often backfires,” Bodas says. “Untrained professionals make your vehicles issues a matter of trial and error, guessing which parts need to be replaced to fix that funny noise and potentially causing new problems.”
Casey Bond writes for GoBankingRates.com, a source for auto loan rates, CD rates, savings account rates, personal finance news and more.