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Home Page > Motoring > Buying a Car New or Used? > Buying a New Car > Depreciation

Depreciation

The largest loss you will face when buying a new car is when you drive it off the forecourt.  In fact over the first year of a car’s life it will lose about a third of its value. However, like most things if you research the market you will have a pretty good idea of ways to reduce this.  If for example you buy a car that is desirable or exclusive, they are much less like to depreciate as much as some of the others, but this is not always possible.

Depreciation is the amount of money you lose over a period of time  - it can be immediate most new cars depreciate as soon as you drive off the forecourt  it can be worth thousands of pounds less.  The general rule of thumb is that most cars lose about a third of their value over a year. 

Here are some helpful tips to reduce this:

Choice of Car

Right Model: it is more important now to buy the right model as there are so many niche models about, prestige brands always command a good price over the mass makes and models and they portray a strong image and have a high demand. They cost more initially but you lose less when you come to sell as they retain their value better.

Engine type: If you were to buy a 4x4 without a diesel engine you will lose out when you come to sell it as they command a better price compared to less-efficient petrol models. Be aware of the specification, buying a luxury car without an automatic gearbox is a big no or cloth seats instead of leather.

Buy wisely:  This can keep your loses to a minimum, shop around and by saving at the start this will help you when you come to sell.  Also lower list price models are usually the most popular, so demand will be high and depreciation lower.

Take advantage

If you are buying a nearly new car you can take advantage of the depreciation, consider the following models:

Fleet cars, most popular usually lose more than the uncommon models as there are more of them available on the market. This gives you more choice so these are priced more competitively as the sellers want to move them on.

Large common cars but without the high-status badges, are dearer to buy new but not so popular on the second hand market.

Fuel guzzling cars, due to higher fuel prices.

Dull Colours, these can be considerably cheaper than the popular metallic colours. Demand is not great in second hand market.

Almost New

Let someone else take the biggest depreciation when they buy a new car by buying a nearly new car you can save thousands of pounds, one-year old cars have usually had the largest depreciation part  of the depreciation taken from them.

Franchised dealers, they usually have the pick of the nearly new cars due to arrangements with the manufacturers.



 
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