How To Minimise Depreciation On Your Vehicle

We all want the latest cars on the market, but having a modern fashionable car comes at more than a price of the car itself, but also the depreciation factor. You may think that fuel or insurance are the most costly features of owning a car but in fact depreciation is by far the most expensive part of owning a vehicle.

Appreciate of depreciate?

Over a car’s lifetime, depreciation accounts for an average of 32% of the total cost of ownership - including repairs, fuel and insurance. There is however ways in which you could minimise depreciation costs and get the most out of your money.

With the exception of highly collectable vehicles, our cars are the most expensive asset most of us own that can be guaranteed to lose value. It is a sure fact that your car will be worth less the longer we drive it and most of us borrow money for this privilege.

Depreciation is measured as a percentage of a car’s value after three years or 36,000 miles, compared to its price as new. A car with very heavy depreciation could be worth 30% of its sale value after three years, while a car with low depreciation may retain 75%.

Pitfalls of Depreciation:

The steepest period of depreciation is in the first year of ownership, some even say within the first mile. This is the point at which your ‘new’ car becomes ‘used’ and even if you were to return to the dealership they would quote you the wholesale price to buy back the car which you just paid retail value for.

Most leading experts put the average first-year depreciation somewhere between 15 and 20% of the price of the car. After that a vehicle will lose around 10% of its value annually for the next four years though there can be very wide variations among models and everything is dependent on the mileage driven and condition.

How to exploit depreciation:

Motorists can actually take advantage of depreciation if they are equipped with the no-how. Last of the line models may have a reduced value which compensates for a lower price - you could save yourself some cash which you could use to buy some new trendy car mats or other accessories.

If you pay less in the first place for a car your potential for losing money is reduced. Similarly buying a nearly new car could also be an intelligent buy, dealers often have the pick of nearly new cars, and they will nearly always have a full service history, guarantee, warranty and low mileage.

According to a recent study, BMW’s Mini is the car which retains the most of its value – 66% over three years. The star super mini’s popularity has ensured its resale price remains high, plus it’s a trendy car to be seen driving without the huge price tag overhead - just a stylish roof to contend with.

The key to beating depreciation is to make sure you research the cars you can afford and check they are the best in their class and will be in popular demand for the foreseeable future.