CAR DEPRECIATION

Thinking of replacing your car? Here's a key thing to take into account..

Over a quarter (28%) of UK drivers do not consider depreciation when they are buying a car, despite having a full understanding of it, and one in five (20%) think that all cars depreciate at the same rate (men 16% and women 23%). That's according to a recent survey from insurethegap.com. The survey also found that younger drivers under 35s (34%) are also twice as likely to think that all cars depreciate at the same rate as over 55s (14%).
Depreciation is the difference between what you paid for a car and the amount you can get back when you sell or trade it in. A new car loses approximately 20% of its value when it is driven off the showroom forecourt, and cars lose between 15 - 20% of their value each year, but, different makes, models and even colours will all hold (and lose) their value differently. However, it seems it is often ignored or forgotten about when people are purchasing a car, even though for car owners who like to change their car regularly the financial effect can be significant.

According to the survey, one in ten (10%) drivers say that depreciation is not something they think about. Older drivers are more likely to think about depreciation than younger drivers when they are buying a car. Almost half of drivers (44%) in the survey say they keep their car until it's run into the ground, which explains why they do not consider depreciation (men 40% and women 48%).

We're seeing some great deals in the new car market, which could mean second-hand cars lose their value even quicker if more buyers than usual choose new. However whatever car you buy, one thing is certain, as soon as you drive off its value starts to depreciate. If you normally look to trade your car in after a few years, it's definitely worth doing some research on whether the make / model you have in mind tends to drop like a stone or holds it value," said Ben Wooltorton, Chief Operating Officer at InsuretheGap.com.

He continues, "Depreciating factors that affect the value of a vehicle regardless of its make and model include things like mileage, number of previous owners, service history, general condition and colour. Reliability, safety, and reputation tend to apply to specific makes or manufacturers and typically do not change over the course of ownership."

Top Ten Tips on Car Depreciation

In addition to a car's age, where the years of one, three and eight often signify sharp price drops, there are a number of factors that determine a car's depreciation rate - some apply to all vehicles based on how they have been used and others are due to the specific characteristics of a particular make and model.

Five factors affecting the value of a vehicle regardless of the make and model include:

1. Mileage - the average mileage is around 10,000 per year. The more miles, the less your car is worth.



2. Owners - the more owners a car has, the less it will be worth.



3. Service history & general condition - a full service history from a manufacturer, approved garage or dealership helps to maintain a car's value. The upkeep and maintenance of a car will also help retain its value, as dents and scratches can seriously affect its resale price.



4. Colour - generally speaking, the popular selling colours of grey, black, silver, blue and white tend to be the best colours for holding their value. Slightly bolder (red) or off-the-wall colours might not ...