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The Impact of Depreciation on a New Car

By: Sally Aquire - Updated: 9 Oct 2012 | comments*Discuss
Motoring New Car Car Budget New Car

If you are motoring on a budget, you are probably worried about the impact of depreciation on a new car. Depreciation refers to the reduction in value that almost every car experiences during its lifetime. It is one of the hidden costs of motoring, as the full extent of your car's depreciation often only highlighted when you decide to sell it on. This article discusses the impact of depreciation on new car prices.

Which Types of Car Have the Least Amount of Depreciation?

Typically, the cars that have the least amount of depreciation over time are the ones that are top of their particular class, or cars that are rare and therefore in high demand. Unfortunately, this means that you will often need to spend a lot of money on a new car to be sure that it won't depreciate too much, and this is simply not possible for drivers who are on a motoring budget.

How Can I Avoid Depreciation?

When buying, take new car prices into consideration. New cars that have their prices slashed will likely be snapped up by buyers looking for a new car at a reasonable price. Because these cars are not going to be in high demand, they will depreciate. The best bets are often cars that have got good reviews from both the press and customers and is not about to go out of production anytime soon. This makes it more likely to maintain its current value for longer, although it is difficult to predict how quickly outside factors may cause the car to depreciate quickly.

There are times when it can pay to buy a car that is nearly new instead of brand new. If you buy from a franchise dealer, you can often pick from a wide range of nearly new models. These are usually fully serviced with low mileage, guarantee and warranty. If you buy nearly new, you can cut out a significant proportion of the drop in value that occurs when a car's initial owner sells it, as it isn't you! See our article on 'The Impact of Depreciation on a Used Car' for more advice on beating depreciation when buying a used car.

Another option is to pick a car with low running costs, especially in relation to fuel costs. As this will increase the demand for this type of car, it should depreciate less quickly than a car with higher running costs. Cars with high fuel costs attached to them (for example, those with large fuel tanks and high maintenance costs) are currently depreciating a lot as there is less interest in buying them.

Depreciation is a big hidden cost of motoring, and is a concern for most motorists, especially those on who are on a motoring budget. The least depreciating cars are those that are in demand, so it is usually a bad idea to take advantage of low new car prices if you are concerned about the impact of deprecation on a new car. Of course, this is often a catch-22 situation if you are on a motoring budget, as you are unlikely to be able to buy one of the in-demand cars.

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