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A guide to depreciationBack

One of the most important things to consider when you’re buying a new or used car is its depreciation value. Getting this wrong could cost you money when you come to sell.

The depreciation of a car is the difference between what you initially pay for a car when you buy it, and what it is worth when you sell it. All cars depreciate in value, and for most people, it will be the biggest hidden cost they have to face during ownership of any vehicle.

It’s easy to get carried away when you purchase your new car, and not give its depreciation a second thought, but you could be in for a shock if your perfect set of wheels ends up only being worth a fraction of what you originally spent a few years later.

For some top tips on how to pick the best car for your future, take at look the advice from the Trusted Dealers below:

Popularity – is the key when it comes to making a good sale on a new or used car. If you opt for a popular make which everyone wants to buy, you can be sure it will lose its value slower. For example, the Mini Cooper has been going for more than ten years and still remains a popular car to buy. Its fuel efficient engine coupled with the fact you can personalise the car to make your model even more unique, means that after three years it will still be worth around two-thirds of what you paid new.

Avoid older models – Older cars will usually contain less fuel efficient petrol engines, so they are bound to lose money more quickly. Be wary of manufacturers who are offering their cars at greatly reduced prices, it might mean that they are planning to discontinue the line if the particular car has been around for a number of years, so it’s well worth doing your homework before you enter into a sale. If you fall into the trap of purchasing a car which is discontinued, you could be faced with losing up to 80 per cent of its value after just three years of ownership!

Second-hand bargains – if you prefer to buy second hand then you could actually benefit from a car which has depreciated quite a lot in value. This is when studying those cars which lose the most value becomes even more important if you want to grab yourself a bargain. The Peugeot 407 saloon is a great choice of used car as it depreciates in value by around 75 per cent in three years. Ford Mondeo cars also lose value fast making excellent second-hand buys.

 

Posted by Leana Kell on 09/11/2011