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cutting your car costs

car depreciation

Depreciation is the reduction in value of your car caused by everyday wear & tear and even just the passing of time. It's one of the biggest costs car owners face.

Buy a new car, and depreciation is at its worst. The moment a car isn't brand new anymore, thousands can be wiped off its value. Even 'nearly new' cars can lose thousands over a few years ownership. So how can depreciation be minimised, or even avoided altogether?


New cars lose the biggest amounts of their value within their first three years - often over half their purchase price. So if buying a new car, selling it on within this time can help stem these most serious losses.

How long the waiting list is for your new car will also give a clue to what its depreciation will be like. A long waiting list means big demand but not many being produced, so used values are likely to hold up well.

Depreciation rates are also affected by whether the model of car you want to buy is about to be replaced. Values of a replaced model are likely to take an extra hit in the future for being an 'old style'. Values of a completely new or
re-designed model that will remain current for some years ahead are likely to hold up better.

Also consider the maker's marketing activity. A car's future value will likely be hit if it's being heavily discounted when new. And to dodge a really big hit, avoid unusually styled cars or lurid colours.

New or used, some makes of car keep their value better than others. Though best performers vary as model styles and marketing strategies change, in general the slowest to depreciate are prestige makes like BMW, Audi and Mercedes - because they are judged to stand up better to wear & tear. More recently, new Jaguars like the XF have joined the list of slow depreciators due to their popularity. But even between the premium marques, depreciation rates can be significantly different. This could make a basic Audi model a far more sensible purchase than a high spec model of a lower-priced brand like Ford.

Among smaller cars, models from Honda (Jazz, Civic, Accord), VW (Polo, Golf, Passat) and Toyota (Yaris, Avensis) are typically strong performers at holding their value after three years.

To get an idea of roughly how much your chosen car is going to be worth when you come to trade it in - especially if it isn't a newly launched or facelifted model - check out the advert or forecourt prices for cars a few years older than the age of car you're thinking of buying. Or use price guides like Parkers or What Car, selecting your make and model but one registered a few years earlier.

The way to minimise depreciation even further is to buy a used car that has depreciated almost to nothing already. These days that's not necessarily an old banger. Cars over 8 years old can be worth next to nothing yet still be a decent buy if they've been looked after. At this age, among popular marques there's often a good selection available still with reasonable mileages.

But to stick two fingers up to cash-sapping depreciation altogether - buy a classic car. It doesn't have to be something exotic. A good old Triumph, Morris Minor, Rover or even Ford can be cheap to maintain, will be reliable if looked after properly, and even be a bit of fun. Many classics have excellent clubs and suppliers for any parts you'll need. What's more, it might also be road tax-free and even actually increase in value! Perhaps an ideal second car?

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