Your vehicle is surely one of your biggest investments. However, nobody drives the same car for lifetime and after a few years down the line, you would look for replacing your old car with a new one. Now, here comes the notion of car depreciation. In simple words, it refers to the sum of value a vehicle will lose out on over time compared to the amount you invested while purchasing the car-but that figure is again determined by the type and condition of your car.
So how much does a car depreciate over the years?
Well, it’s shocking but you will have the maximum hit of car depreciation in your very first year of ownership! Yes moment you take the proud possession of your new car and drive away with glory from the showroom, your car will have 9.5% depreciation. According to experts, a brand new auto will experience 19% of car depreciation in its first year only. But, you would be relieved to know that the car depreciation rate doesn’t rush at this speeding rate after the first year and you will expect something like a 15% drop in 2nd & 3rd years. Once the vehicle starts approaching 8-10th anniversary, the depreciation rate starts to decline considerably and after that it would just come to a standstill.
As per the motoring costs pundits, when you proceed to buy your new car, it’s wiser to settle with the steams that can retain their value well over time as such cars assure larger savings in the long run. In fact, it’s more important over fuel efficiency of the car.
However, as mentioned earlier, the car depreciation cost would vary between car models and ranges. For example, say, if you buy a new car for around £10,000, it would cost you something like £2000 per year in terms of car depreciation & would be valued at £4000 after 3 years. Now, if you buy a luxury car for £50,000, the car depreciation amount would be a whooping £10,000 a year.
Reasons which influence car depreciation
There are various factors which play a decisive role in determining your car depreciation amount-
Mileage is a big factor in determining the depreciation value of your car. More the miles travelled, lesser would be the worth of your car.
How many owners
The car depreciation value would be dependent on number of the owners as well. Yes, fewer your beast had, the better. This is an important point to remember if you are taking to a pre-owned car. You MUST check the vehicle’s logbook or its V5C registration prior to investing your hard earned money on it.
Some models beget more car depreciation than others. For example, a Citroen C5 would lose up till 76% over 3 years on average mileage. On the other hand, Audi A1 Sportback would lose a much lesser 36% within the very same period.
Condition of the vehicle
Now, this one is a no-brainer for obvious reasons- if you are buying a car which had an extensive repair and salvage work done on it, it would come with reduced value. So, if you are planning to sell your car after a few years, it’s smarter to prefer a one that had not had much of damage or accident history.
Size of the car
This is another major factor that exerts major influence on car depreciation value. It’s to stress here that big-sized luxe wheels would show more car depreciation compared to smaller ones. Why? Well, the big-sizers demand a lot more to steer compared to smaller ones. Moreover, they also mean pricey bills for maintenance and parts.
Do you know why petrol cars show more car depreciation compared to diesel vehicles? The answer is simple- diesel cars mean better fuel economy than their petrol counterpart. It eventually means, smart car owners would generally prefer the diesel option over the petrol one for better engine efficiency.
If you are buying a pre-owned car which you have plans to sell off after a few years for a sizeable price, be careful about the Road Fund License to be payable for it. Fuel-guzzling steams would anyday call for more taxes a year which consequently means more car depreciation.
Tips to avoid car depreciation
Now, the good thing is, you can still do something to avoid car depreciation.
Choose low-depreciating car
You can avoid car depreciation even before you own it- be wee smarter and search out a slow depreciating car. Here is a top 5 slow depreciating car for your help-
City car- go for Peugot 108
Lower medium- go for Toyota Prius
Supermini- Audi A1
Executive- Jaguar XF
Upper medium- Mercedes-Benz C-Class Coupe
Nearly-new or used car
As mentioned earlier, the steepest of car depreciation would occur in the first 3 years only. So, instead of getting a brand new car, take to a nearly-new or used car.
This is definitely an important point when you are trying to avoid car depreciation. Excess wear & tear and damages would go a long way in slashing down the car’s value. So, when you are planning a lofty sell of the wheels down the line, make sure your car is well-protected. And, try to avoid modifications.
Keep mileage low
More the mileage, lesser would be your car’s value. So, try to keep the mileage down.
Better fuel efficiency
Always try to choose a car that can assure more miles/gallon as more the fuel efficiency, better would be the car’s value- and eventually lower would be the depreciation.
As mentioned earlier, big-sized steams tend to depreciate fast. So, if you are looking for cars with lower depreciation, go small.
The longer warranty showed by a car, higher would be its value. It’s must to check the manufacturer’s warranty before you buy your own steam. Try to settle with a car that comes with 7 years or at least 5 years of warranty assurance.