Car Depreciation And How To Reduce It

If you own a car you will probably understand that as it gets older and use it more it loses value, this is called depreciation. It is unavoidable unless you own a more desirable specialist or exclusive car. Depreciation more specifically refers to the amount of money lost between the time you bought the car and when you come to sell it.

The rate of depreciation will vary dramatically from car to car depending on what make, model and specification the car is and how you use it. New cars lose value almost the second you drive them off the forecourt and by the end of year one alone your car could have depreciated by up to 40%.

More popular models are likely to only lose 10% of their value but that's still an alarming rate within just one year. Drivers that do around 10,000 miles a year should expect a depreciation of up to 60% of its value by the end of the third year.

Certain models and specifications are likely to depreciate more than others, for instance executive cars without air conditioning, electric windows, or leather seats are often less popular than others so try to stick to specification and avoid buying higher end cars and throwing out options to save money.

Avoid boring colours and non metallics as they can be more difficult to sell than more popular colours and you may have to drop your price to compete, metallic blue, red and silver are the most popular colours whilst yellow is statistically the least popular. Cars with a metallic finish are said to be worth 2 to £4,000 more than non metallic models after one year.

Bigger engine cars are starting to show a trend of being harder to sell and subsequently not holding their value for as long. This is likely to be because of rising insurance and fuel costs and people's growing concern about the environment. On the other hand diesel engines are actually showing a trend of holding their value better compared to their less efficient petrol counter parts

Top selling fleet models can often lose their value quicker than rarer models simply because of the sheer numbers of used them on the market. When there is more choice buyers will opt for the cheaper ones there for sellers often drop prices to be competitive.

Buying what are considered to be prestige brands will help prevent losing out due to depreciation. They will cost you more initially but due to their strong image and higher demand compared to more main stream brands you are likely to getter a higher price when it comes to selling time.

The best way to avoid depreciation hitting you to hard is to steer clear of brand new cars. Ok so you wont get to choose all the options and get a brand new reg plate but at least you wont lose as much money when it come to selling it.

Buying a nearly new car (1 or 2 years old) could save you dearly, often they come with a full main dealer service history, are fully guaranteed and have low mileage so really they are as good as new anyway. Although if you are really concerned, the best way to prevent being hit by depreciation is to buy a five year old car. Depreciation slows with age and how much it depreciates will be more closely related to mileage, age and condition.

Of course if you are not too concerned about depreciation you are likely just to buy a new car anyway which is fair enough. Likewise if you are buying a used car you can make depreciation work for you. You can often get bargain used cars that dealers are finding difficult to shift simply because they are an undesirable colour, don't have many extras or the model has a reputation.

Depreciation is pretty much unavoidable but explained above are things to look out for to minimise its impact. If you are about to buy a car it may be advisable to check the web or car magazines for cars that are holding their value particularly well. There are even some websites now that can predict depreciation for lots of different cars, new and used, allowing you to make comparisons to get the best deal.

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