Depreciation is the amount of money lost on the purchase price of a car over a period of time. It is unavoidable on all but the most desirable or exclusive cars and can seriously hurt your wallet.
This article will help you minimise the effect of car value depreciation and also go as far as to show you how to take advantage of it.
Avoiding Depreciation
There are certain measures you can take to avoid depreciation, you should choose cars with:
* Strong images. 'Prestige' brands are always in greater demand, and always command a healthy premium over more mainstream manufacturers. Although you'll pay more in the first place, you will generally loose less in the long run.
* Diesels. It is expected that these will command increasingly large premiums over less-efficient petrol models in the future
* Low list prices. Even if a car is renowned for stiff depreciation, a low initial price will naturally mean you lose less come trade-in time. Also, cheaper models are often the most popular in a range, so will naturally depreciate less, anyway
Exploiting Depreciation
If you're a used car buyer you can make depreciation work for you. The following models are ideal candidates for depreciation exploitation:
* Best-selling fleet cars often lose more than rarer models, simply due to sheer numbers on the market. Buyers have so much choice; competitive prices are the only way sellers can shift them on.
* Large mainstream cars without the prestigious badges. They're expensive when new but not sought after second-hand.
* Big-engine cars, especially as fuel prices are rising year upon year
* Boring colours (most non-metallics) can be far cheaper than the popular ones.
* The wrong specification such as executive cars with cloth seats, or no air-conditioning
My Top Tip
Buying nearly new cars has traditionally been the safest way to save cash. New cars can lose thousands just by driving them out of the showroom, but one-year-old cars are often free of the biggest losses incurred by new cars.
Franchised dealers often have the pick of year-old cars, thanks to the many schemes operated by manufacturers. Such cars will have a full service history, be fully guaranteed and often sport low mileages.
You may not benefit from a brand-new registration plate, but the guarantees are far stronger than with imported cars. What's more, you could drive away on the same day, but crucially be able to see, feel and drive the car before you part with cash.
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