When you buy an automobile, it is important to consider how much it may be worth when it comes to sell or trade it in the future. As a general rule, electric cars tend to depreciate faster than traditional gasoline vehicles. The popularity of a given make and model of car will also help to determine its resale value at any given time.
Your Current Loan Balance Doesn’t Impact a Car’s Market Value
It is important to know that the amount that you owe on a car is different than what it is worth. Car payments are determined by the term of the loan and the interest rate. Therefore, it is possible to pay more than the car’s market value or to become upside down on a loan, months or years after it is purchased.
Electric Cars Experience Faster Depreciation
Electric cars lose about $5,700 in value per year in the first five years after they are first sold. A vehicle powered by gasoline will decline by an average of $3,200 over five years after being sold. However, as electric cars tend to cost more than those powered by gas, it may be possible to resell an electric vehicle for a higher dollar amount.
Electric Cars Aren’t Necessarily Selling Fast
Another factor that hurts the resale value of electric cars is that a relatively small portion of the market wants one. If you have less demand for a product, it generally means that you have to sell it for less. Some electric vehicle owners turn to selling their cars for cash just to get them out of their driveway. While this could change in the future as electric car prices come down, it may make it difficult to get a good price for your car today.
People Understand Cars With Gas Engines
Another issue that you may encounter when trying to sell your electric car is that people are still used to powering a car with gasoline. They may not understand how the battery power is generated or want to install a power station in their homes. As there are few places to charge an electric car, it may not be as convenient to use. Ultimately, this will depress its selling price.
As a general rule, electric cars are going to sell for less than traditional vehicles. Although this may not be ideal for those trying to sell their vehicles, it may be a good time for someone looking to buy to get a quality car for less than $10,000.
Check out Should I Buy A Used Electric Car for more information.