Used Car Depreciation
Everyone who owns a car knows that that
as it ages and gets used it loses value. This loss of value is
referred to as depreciation and for most cars (the exception being
specialist and classic models) it cannot be avoided. Cars are
rarely investments; they are commodities that rapidly lose their
Used cars depreciate at a much lower rate than new cars. It is
not unusual for a new car to lose a third of its value or even
more within its first year on the road. Although used cars depreciate
at a much lower rate than that, there is a significant difference
between the relative depreciation rates of different models.
In general a popular used car will depreciate
at a lower rate than a less popular model, and a large uneconomical
car, a so-called gas guzzler, will depreciate faster than one
that is particularly economical. One event that can speed up depreciation
is when a manufacturer introduces an updated model. If you want
to select a car that has a low rate of depreciation then it is
a good idea to check out online how the prices of similar models
have changed over the last few years.
A way of avoiding the alarming initial
rate of depreciation associated with new cars is to buy a nearly
new car, by which we mean a car that is less than two years old.
The advantages of buying such a car are that the period of rapid
depreciation will be over, and that the manufacturer’s guarantee
(which is always transferable) will still be effective. You will
need to ensure that the car has been maintained as required by
the manufacturer and ideally that it has a low mileage.
Car depreciation is an unavoidable fact
of life. Even if you leave your car in the garage for most of
the time and only take it out to clean it, it will still lose
value. The best you can do is to minimise it by choosing a popular
economical model. Have a look at the used
cars from motors.co.uk to see if there is anything