I would estimate that 95% of American’s do not track their car value depreciation. It’s mind boggling to think that people go out and spend $35,000 on a new BMW 3-series and have no clue what their car value is at any given time. It is essential to your wealth calculations and financial health to be able to consistently track the value of your car if you needed or wanted to sell it.
How to Track your Car Value Today
The best method I recommend for tracking your current vehicle’s value is to use Kelly Blue Book. It has been around for a long time and even though it has been criticized for being artificially inflated it still provides consistent value to the user.
To use my vehicle as an example I own a 2005 BMW 530i in silver with 77,520 miles (as of yesterday). If I enter that into kbb.com and select the relevant options for my automobile (sirius satellite radio, integrated phone), I’m able to see a table of values for my car at different conditions.
I always use private party value when tracking since if I ever sell the car i’ll do it myself rather than losing money to a dealership. To be fiscally prudent and conservative I always take the value a step lower than what I believe the car to be. So if I look at the money I’ve put into the car for maintenance and assess it’s current condition I believe my vehicle qualifies as “Very Good”, but I’m going to track the value using merely “Good”. That gives me a value for my car as of today of $14,517.
Tracking Car Value Depreciation
To track the car value depreciation over time I simply add a worksheet to my budget excel workbook and every money I input the value of my vehicle into the spreadsheet as well as the miles. This also is valuable because if I sell my vehicle to a private-party I can give them the sheet that shows wear and tear as well as the dates and times that I had maintenance performed. Through this I can track and understand how my vehicle I purchased for $17,500 in the beginning of 2011 is only worth $14,517 a mere two years later.
When you spend thousands of dollars on a new vehicle it’s important to know the value of your car and how quickly you have car value depreciation. Too many people don’t think about it until they want a new vehicle and realize too late that the trade in or private party value of their “luxury” vehicle they bought for $50,000 is now less than the price of a new Toyota Camry.