Car depreciation is an unavoidable hidden cost of owning a car. All cars depreciate (although some far more than others) and if you’re not doing your research properly, you can end up losing out financially.
In fact, CAP Automotive say that depreciation typically costs drivers three times as much as they spend at the petrol pump. It’s not all doom and gloom though – there’s ways to minimise how much car depreciation will cost you with four simple tips.
Reputation is everything
Unless you’re buying an old banger to drive into the ground, you should be doing your research into the most reliable makes and models. Not only for the convenience of owning a car that doesn’t regularly breakdown, but because this effects resale value massively.
It might be tempting to buy based solely on aesthetics, but if you’ve bought a car from a manufacturer known for their hardy German engineering, it’ll be easier to sell on as it’s more desirable to future buyers.
Keeping up appearances
Taste is subjective and this is never truer than when it comes to cars – just think of all those people who voluntarily bought a pastel green Fiat Multipla. It’s tempting to go for the exact colour, trim and extras you love when buying a car, but it’s worth considering whether the next owner really wants the cream leather seats you like so much. This is equally applicable to colour – play it safe with silver, black and blue for easier resale.
On the subject of appearances, looking after your car post purchase goes a long way for resale value. Make sure you keep up to date with a full MOT and service history, fix any scratches or dents, don’t smoke in your car and clean up your McDonald’s wrappers and Starbucks cups.
The higher the price, the further to fall
Luxury high end cars cost more to buy, which means their value has further to plummet. It’s estimated most cars lose roughly 40% of their value over the first 3 years. So if you compare a £15,000 Nissan Juke to a £50,000 Jeep Grand Cherokee both with a 40% depreciation over 3 years, it’s a big difference out your pocket.
Though this isn’t always the case – if you happen to be a millionaire, Ferraris and Lamborghinis have an average depreciation rate less than 15% over the first 3 years. On the other end of the scale, some of the more affordable models from the Fiat Range have been cited as some of the worst depreciating cars of 2019.
As mentioned above, most of this comes down to desirability, reputation and availability – always do your research before you buy.
Moving Onto Greener Pastures
With new legislation being brought in around the world to deter motorists from diesel cars, alongside a big push from manufacturers to make the leap to electric – the electric car market is booming – especially used EVs.
Initially electric cars struggled to keep their resale value as motorists stuck to the known. However with extended battery warranties as well as increased range and availability of chargers – electric has gone mainstream.
On average, electric vehicles are holding their value as well as or better than their fossil fuel counterparts – a trend which is predicted to continue upward as range increases and more affordable EVs come to the market.
Header Image Credit Peter Pryharski: https://unsplash.com/photos/8zJSg57TBBA