What Is Resale Value?
The amount of money an original purchaser may anticipate earning from reselling an item to another entity is known as resale value. Technically, any item may be purchased and subsequently resold with a specified resale value. However, the concept is most usually associated with major assets like boats, vehicles, and houses.
Let’s site an instance of an individual intending to sell his/her car after use over a certain period
There are a variety of reasons why a car owner would want to sell their vehicle. These range from just wanting to get rid of it to wanting to upgrade to a newer model. The automobile model type, the history of the vehicle, and its state all have a role in determining its resale value.
In general, the more costly an automobile was when it was acquired, the greater its dollar resale value will be. Market factors are also in play. When compared to other models in its class, if the model is uncommon or in high demand, it will have a higher-than-average resale value.
Outside of regular wear and tear, a car’s general condition has an impact on its resale value. Maintenance and cautious use help to keep an automobile in the best possible shape. This maintains the high value. Lack of maintenance can lead to an increase in the amount of damage to the vehicle, diminishing its value. Collisions regardless of whether or not repairs are successful can reduce the value. As can any naturally occurring damage such as floods,
Aftermarket automotive components can sometimes assist to increase the value of a vehicle. Third-party auto parts are known as aftermarket auto parts.
Resale Value Example
If you purchase Nissan at $30,000 with a residual value of 55%, you can still get around $16,500 when you sell it in 5 years. Compare that to Chevrolet which sells at a cheaper price of $20,000 but has a lower residual value of 30%. You are only able to get around $6,000 at the end of its life span. You end up losing more money by opting for the cheaper option.« Back to Glossary Index