It is often said that buying a car can be one of the most expensive lifetime purchases with the obvious exception of your house. Unlike a house, cars will suffer value depreciation quickly so new or used car buyers will want to try and lay hands on a vehicle that will still be worth as much as possible when it comes time to sell it on.
So, how do you cheat depreciation? First, you’ll need to know some general rules. Second, it is best to select a model that people will still want to buy in years to come. Fortunately, used car finance experts Trade Centre Wales have advice to help you defeat the demon depreciation.
What To Look For
Broadly speaking, luxury cars hold their value better than small family models. SUVs and 4×4 models in particular hold their value well, with cars in that class retaining around 46 per cent of their price after three years – when bought new.
However, when it comes to the used car market, the best bet is to look for big name ofering economical vehicles. Diesel engine vehicles from the likes of Audi, Volkswagen and BMW spring to mind.
They will have a higher purchase price compared to petrol variants, but will be worth more than them when they are sold on, thanks to the economy and longevity of diesel engines. As more people prize fuel economy thanks to rising costs, diesels grow more appealing and therefore their price holds accordingly.
It might be wise to avoid buying top spec models as they will depreciate in a similar fashion to other high specification variants but will be far more expensive to buy new.
The Best Models To Choose To Beat Depreciation
Of course, the very best cars in general are luxury models such as Ferrari and Lamborghini, but not everyone has the wherewithal to buy into those brands. Instead, you’ll want to look at cars such as….
Temporarily forget everything we’ve said about diesel! One of the most affordable car brands on the market, Dacia introduced the Duster as their affordable SUV option. The car has proved popular, and the 1.6 litre petrol Ambience model holds its purchase price well. However, the 1.5 dCi model is also popular and retains its price too. For example, a nearly new 2016 model will cost around £14,950 – but you can expect to sell for around £9-10,000 after three years.
The sub-Corsa small car is an affordable motor when bought new, but its popularity seems to have ensured good resale values. It loses just £2,258 over the course of three years and 30,000 miles – making it a great choice when you want a cheap used car you can resell later. Brand new models are around £8,890 and good condition 2013 plates can be had for £5,000 and up.
While the premium brand may not scream affordability, the resale value of an Audi A1 is high thanks to being from a prestige brand and the rise of public interest in smaller cars. You’ll find a new model for anywhere between £15-18,000 new, while three year old models are on the market for around £10,000 and up (excluding those high-milers in the 100,000+ range).
This sporty model looks great and carries the VW badge of prestige, the Scirocco is a great choice in the diesel variant as it retains value well. A new model will cost around £20,000, and you’ll get around £13,000 for a three year old car with sensible mileage.
Are you noticing a trend? The bigger the name, the better the value. The Range Rover is a fairly iconic vehicle – but is in such high demand due to its spike in popularity that it holds value better than other luxury competitors such as the Audi A8 or Mercedes S-Class.
Brand new, you’ll pay around £76,350. A 2013 variant with less than 40,000 miles can still sell for as much as £58,000.
However, while this gives it a good depreciation percentage compared to other vehicles, you’re still losing over £18,000 – enough to buy yourself a top spec Ford Fiesta or similar small vehicle.
Ultimately, car depreciation depends on the buyers’ initial budget. If you’ve got the money to purchase a Range Rover or other luxury brand, you’ll most likely consider £18,000 of depreciation acceptable. However, on a smaller budget resale becomes much more important – so opt for an affordable car like the Vauxhall Viva or Audi A1. Depreciation is an unavoidable issue but it can be mitigated by a bit of thought.