How to beat depreciation on your car

You're burning money as soon as you drive your new car out of the dealer's yard, so the saying goes. That's because cars depreciate on average by around 14 percent per year in the first three years, then up to eight percent after that, says consumer watchdog Choice.

If you purchased your vehicle with a car loan, then it's likely that you'll still be paying off a depreciating asset in five years. But what if there was a way to slow depreciation on your prized possession so you can optimise resale value?

Unless you buy a collector's item, which will hold its value better than most other vehicles, all new models will lose some of their value over time. But there are a few buying tips to follow to get the most money of your set of wheels over the long haul.

Market research

Do your research to discover which makes and models best hold their value over the years and use this information to guide your buying decision. The same can be said for colour and transmission; fuchsia may be your favourite colour now, but other drivers may be less inclined to buy a pink-coloured used car when it comes time for you to sell.

Timing is key

Buying at the end of the calendar year or just before a new model is due to be launched can increase your bargaining power on a new car. That's because the dealer will be keen to clear older stock from the lot, so you're likely to get a better deal on purchase.

Ship shape

Hang on to receipts from regular car services as a record for potential buyers. They'll be pleased to have found a well maintained car and you'll be in a better position to demand your asking price. Repair any minor damage to the car too, such as small dents or scratches, because this will further increase your resale value.

Shop around

It might be tempting to opt for the first car loan you come across so as to get the ball rolling and secure your dream car. But it really pays to shop around for a better deal on car finance, in the same way you would when shopping for the car itself. Use comparison sites such as RateCity to shave time otherwise spent visiting multiple websites of car loan providers in search of quotes.

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