Buying a car Calculating depreciation
Calculating the true cost of car depreciation
The moment you drive a new car off the forecourt, its value starts to seep away through depreciation.
By the time a Ford Focus is three years old, for example, it’s likely to be worth just 40% of the original list price.
In fact, whichever car you choose, car depreciation is likely to account for more than half of your running costs over the first three years.
So how can you avoid getting stung? Well, don’t get hung up on depreciation as a percentage of a car’s list price, but instead concentrate on the real financial costs.
By comparing the discount you can get on a new car with its future resale value, you may find that a model you thought looked cheap to buy works out more expensive in the long run, or vice versa.
If you have car in mind, you can look up its future resale value and running costs in the Which? Car reviews.
And if you need any kind of financial advice, you can speak directly to one of our money experts.
How depreciation affects different types of cars
They may look cheap, but choosing the wrong could cost you more than £6,000 in car depreciation in just three years.
However, larger superminis tend to be more competent all-round cars, commanding higher list prices. This means there’s generally a healthy demand for them second-hand, keeping used prices strong.
When car depreciation is taken into account, budget can work out costlier than their premium-badged rivals.
By negotiating a generous discount on a model that holds its value well, such as a BMW 1 Series, you can minimise the true cost of car depreciation.
The discounts offered on some mainstream family cars can make a huge difference to their overall running costs. In fact, a serious discount is often necessary to avoid crippling depreciation.
Space and versatility needn’t cost the earth. You can haggle several thousand pounds off the price of some s, making them cheaper to run than much smaller cars.