Understanding Diminished Value
When you first purchase a vehicle, the price you paid for your car
originally may devalue as the car gets older and is driven. Diminished
value entails this drop in the money amount that your car is worth due
to age, damage to the vehicle and mileage.
Some vehicles retain their value over time better than others do. This is mainly due to the vehicle's design, its overall durability, the amount of normal repair and maintenance that has to be done over the life of the car and its ability to use gas efficiently. The popularity of a particular model of vehicle for the above reasons can also impact the value of the car over time.
Your car may devalue by half the moment you drive it off of the car lot. When you go to purchase a vehicle, it is wise to research the resale value of the model of your vehicle after a number of years. This is also important when it comes to your car insurance. For instance, if you are in an auto accident in your vehicle is totaled and you have comprehensive coverage the insurer will give you a certain amount based on the value of your car at the time. The amount that you are paid for your car depends on the resale value of the same models of your car in your local area.
Another key aspect of this to consider is your deductible. The amount of your deductible is subtracted from the money that your insurer will be giving you to purchase another car. For instance, if you have a $1000 deductible in your vehicle is valued by your insurer at $8000, you will only receive a check for $7000. When you are setting your deductible with your insurance, either set it at a low amount or, if you must have a higher one, that that money aside in savings so that you will have it in case of an accident.
if you would like to purchase a vehicle that has the ability to retain a strong value over time, it is imperative to do your research. Talk with your insurance agent, your car mechanic and people that you know for suggestions as to which vehicles are the best in this regard.