What factors affect a car’s rate of depreciation?
There are a few factors to consider if you’re trying to help your car hold its value for longer:
Make and model
Just like clothes, different cars can become more fashionable than others depending on what’s trending. That being said, some are timeless: think the 1960s Mini Cooper or Volkswagen Beetle.
Reliability
Ultimately, we all want a car that will get us from A to B every time. Certain manufacturers have a reputation for building reliable cars that are high quality and solidly constructed. Ford, Toyota, Honda, Mercedes, and more are all known for making models that can go the distance.
Fuel consumption
While you might dream of putting a Range Rover on your drive one day, the bigger the car, the faster it depreciates. Bigger cars also burn through fuel, which could put off future buyers who want to cut costs and protect the environment.
Mileage
The more you drive, the faster a car will lose value. Models that have been put through their paces and have thousands of miles on the clock will be worth less than a car of the same age that has barely moved off the driveway.
Condition
While you’re not expected to keep your car in pristine condition, any damage could impact its value. Scratches, scrapes, scuffed upholstery, and faulty electronics can all affect the depreciation rate.
Number of previous owners
Just like mileage, when it comes to previous owners, less is more. A car with just one or two careful owners will likely hold its value better than one frequently changing hands.
Service History
Having a complete service history is usually a good sign that a car has been well looked after. You should be able to see exactly when and where the car was serviced and whether it is in line with the manufacturer’s guidelines.
How can I reduce my car’s rate of depreciation?
While you can’t avoid depreciation, you can take steps to slow it down:
Choose a used or nearly new car
Once a car is over three years old, its depreciation rate will naturally slow down. That’s why second-hand cars can be such a great buy. Not only will you pay less than you would with a brand-new model, but it’ll also hold its value for longer.
Keep mileage low
If you have a hefty daily commute or love a good road trip then a high mileage might be inevitable, but if you can keep your mileage at a minimum, you could slow the rate of depreciation.
Take care of your car
A little TLC can go a long way. Take care while driving, especially when navigating narrow roads or squeezing into tight parking spaces, to keep your car in the best possible condition. You should also book it in for regular services and get any repairs sorted as quickly as possible to maximise its value.
Avoid making modifications
While it might be tempting to supe up your new wheels with extra-low spoilers and flared wheel arches, these modifications could limit its future buying pool and negatively impacts its long-term value.
Stick to popular car colours
You might love a neon paint job, but potential buyers might not be such big fans. In fact, the most popular car colours play it safe – black, grey, and white will all stand the test of time.
Sell at the right time
The used car market ebbs and flows throughout the year. You might struggle to sell a sporty convertible when it’s frosty in January, but a family-friendly seven-seater could fly if you put it up for sale ahead of the summer holidays.
Can you beat depreciation on a car purchase?
Depreciation is a fact of life, but that doesn’t mean you have to like it. Imagine you bought a brand-new car on finance for £20,000 – just three years later, it could be worth just over £10,000.
Now, imagine you waited and went for a used model – you’ve effectively saved £10,000 instantly! While you might have to pay extra to fix any repairs and you won’t get access to all the latest tech, those inconveniences could be a small price to pay for the overall saving you can get by buying a car that’s already been through its fastest years of depreciation.