What is car depreciation and how to avoid it

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Find out which cars lose their value rapidly, and how you can avoid car depreciation to save yourself money

It’s well-known that all new cars lose some of their value the moment they’re driven off the forecourt.

But, over time, some cars depreciate more than others. When buying a new car, it helps to know exactly what depreciation is and how you can minimise its effects.

What is car depreciation?

Simply put, car depreciation is the difference between the value you buy a car for and the amount you either sell it or trade it for. Most cars take their largest hit in value during the first year they’re owned and after around three years, depreciation starts to slow.

Car depreciation is often neglected when consumers are choosing a new car, but it should be carefully considered. Deciding on a car that depreciates more slowly can save a lot of money in the long run.

Most cars depreciate by around 15-35% of their value in the first year and usually lose half their value after three years. According to motoring cost experts CAP Automotive, choosing a car based on its depreciation value can be more economically beneficial than looking solely at fuel efficiency.

What factors affect car depreciation?

Although fuel efficiency alone doesn’t determine a car’s depreciation in value, the MPG of a vehicle does influence this to an extent. Larger vehicles and larger engines require more fuel more often and so it’s not surprising that these suffer more in value depreciation.

Mileage is important too. The more mileage you do in your vehicle, the less it’s worth. Some cars feel the effects of high mileage more than others and it’s these which lose their value fastest. As a general rule of thumb, smaller cars have lower running costs and typically depreciate slowly.

Looking after your vehicle and ensuring you keep it in good condition is the simplest way to avoid massive depreciation in your car’s value.

If you are looking at buying a new car this year, try to avoid any from the list below!

Top 10 depreciating cars in 2017 (taken from WhatCar)

 10. Skoda Rapid 1.4 TDI CR 90 SE L
List price: £18,975
Depreciation after year 1: £11,900 (62.7%)
Depreciation after year 2: £12,950 (68.2%)
Depreciation after year 3: £14,050 (74.0%)
9. Citroën C4 1.2 Puretech Edition|
List price: £18,160
Depreciation after year 1: £11,260 (62.0%)
Depreciation after year 2: £12,360 (68.1%)
Depreciation after year 3: £13,435 (74.0%)
8. Alfa Romeo Giulietta 2.0 JTDM-2
List price: £22,200
Depreciation after year 1: £13,725 (61.8%)
Depreciation after year 2: £15,125 (68.1%)
Depreciation after year 3: £14,450 (74.1%)
7. Peugeot 508 2.0 BlueHDi 150 GT Line
List price: £29,365
Depreciation after year 1: £18,415 (62.7%)
Depreciation after year 2: £20.290 (69.1%)
Depreciation after year 3: £21,840 (74.4%)
6. Peugeot 308 1.6 Blue HDi 100 Active
List price: £19,770
Depreciation after year 1: £12,670 (64.1%)
Depreciation after year 2: £13,670 (69.1%)
Depreciation after year 3: £14,770 (74.7%)
5. Fiat Punto 1.4 Pop+
List price: £12,275
Depreciation after year 1: £8,150 (66.4%)
Depreciation after year 2: £8,825 (71.9%)
Depreciation after year 3: £9,425 (76.8%)
 4. Vauxhall Astra GTC 1.6 CDTi 16V ecoTEC Sri
List price: £24,465
Depreciation after year 1: £16,390 (67.0%)
Depreciation after year 2: £17,590 (71.9%)
Depreciation after year 3: £18,765 (76.7%)

3. Alfa Romeo Mito 1.3 JTDM-2

List price: £16,080

Depreciation after year 1: £11,555 (71.9%)

Depreciation after year 2: £12,180 (75.7%)

Depreciation after year 3: £12,755 (79.3%)

2. Nissan Leaf Visia

List price: £26,180

Depreciation after year 1: £18,880 (72.1%)

Depreciation after year 2: £19,955 (76.2%)

Depreciation after year 3: £21,105 (80.6%)

1. Renault Zoe i-Dynamique Nav Quick Charge

List price: £29,020

Depreciation after year 1: £22,520 (77.6%)

Depreciation after year 2: £23,545 (81.1%)

Depreciation after year 3: £24,370 (84.0%)

Tips to reduce the effects of car depreciation

  • If buying a new car, buy one that’s in-demand and has lower running costs
  • Buy a nearly-new or used car to avoid the most rapid depreciation
  • Keep the mileage as low as possible
  • Avoid adding modifications to your vehicle
  • Keep a record of all service checks and MOT certificates for when you sell or trade-in your car
  • Sell at the right time of year (convertibles and sports cars in summer, 4x4s and larger vehicles in winter)
  • Stick to more common car colours (grey, white, black and silver sell best).

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