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Car Depreciation

Car depreciation

When it comes to buying a car we all have our own tastes and requirements for the vehicle.
However when you buy a car you are losing money as soon as you drive off the forecourt, lets take a look at car depreciation, why it happens and what the alternatives are.

Family Hatchbacks can lose up to £12,000 off the purchase price

What Is Car depreciation?

Car depreciation is the difference between the value of your car and the price you have paid for your car.
According to some experts a typical medium sized family hatchback after 3 years will have lost value of just over £12,000. A car will typically lose value between 15-33% in the first year and up to 50% after 3 years, this obviously varies from model to model, but you get the idea.
Considering how much we are all trying to save money this is a huge amount of money to be throwing away!

Longer warranty helps against car depreciation

What can lead to a higher depreciation?

If you are planning on doing high mileage in your car this will cause depreciation in value, but there are also external factors that can impact your cars value.
This, for example, could be the implications of diesel fuel, currently with various government stances on diesel and pollution will diesel fuel be a thing of the past/ or with the stance change in a few years to come? This sort of legislation can have a huge effect on the price of your new vehicle - ie, what seemed to be a good valued diesel fueled car in a few years could be almost worthless if legislation comes in which penalise diesel fuel cars.

Large SUV's are popular now but if tastes change depreciation will be higher

How to avoid car depreciation

Actually if you are buying a new car it will be almost impossible to avoid the depreciating in value, if you have concern over losing money when getting your next vehicle there is an answer- Leasing a vehicle rather than purchasing a vehicle will totally eliminate your concern of losing the depreciation value of your car. With leasing you never own the car, therefore it is down to the leasing company to cover the depreciation. Of course this come at a small cost to you, depending on which vehicle you decide to lease will effect the amount of money you pay monthly for that car.

  • Tips on helping to lower depreciation-
    • Keeping your car in good condition
    • Complete service history
    • Keep your mileage down (average is about 10,000 miles per year)

To Buy or to Lease?

Every driver is different, the best thing to do is sit down and work out the cost of a lease on a vehicle, and then look at the cost of purchasing the vehicle, taking into account the depreciation value against that vehicle.
In many cases drivers are finding that leasing is a much better option, especially as you can renew with a new car every 3 - 4 years.

If you have a bad credit score and would like more information on leasing get in touch with us at UltraCar we are happy to help you.