Everyone who owns a car knows that that as it ages and gets used it loses value. This loss of value is referred to as depreciation and for most cars (the exception being specialist and classic models) it cannot be avoided. Cars are rarely investments; they are commodities that rapidly lose their value. A
used car depreciate at a much lower rate than new cars. It is not unusual for a new car to lose a third of its value or even more within its first year on the road. Although used cars depreciate at a much lower rate than that, there is a significant difference between the relative depreciation rates of different models.
In general a popular used car will depreciate at a lower rate than a less popular model, and a large uneconomical car, a so-called gas guzzler, will depreciate faster than one that is particularly economical. One event that can speed up depreciation is when a manufacturer introduces an updated model. If you want to select a car that has a low rate of depreciation then it is a good idea to check out online how the prices of similar models have changed over the last few years.
A way of avoiding the alarming initial rate of depreciation associated with new cars is to buy a nearly new car, by which we mean a car that is less than two years old. The advantages of buying such a car are that the period of rapid depreciation will be over, and that the manufacturer’s guarantee (which is always transferable) will still be effective. You will need to ensure that the car has been maintained as required by the manufacturer and ideally that it has a low mileage.
Car depreciation is an unavoidable fact of life. Even if you leave your car in the garage for most of the time and only take it out to clean it, it will still lose value. The best you can do is to minimise it by choosing a popular economical model.
A way of avoiding the alarming initial rate of depreciation associated with new cars is to buy a nearly new car, by which we mean a car that is less than two years old. The advantages of buying such a car are that the period of rapid depreciation will be over, and that the manufacturer’s guarantee (which is always transferable) will still be effective. You will need to ensure that the car has been maintained as required by the manufacturer and ideally that it has a low mileage.
Car depreciation is an unavoidable fact of life. Even if you leave your car in the garage for most of the time and only take it out to clean it, it will still lose value. The best you can do is to minimise it by choosing a popular economical model.
