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The Impact of Depreciation on a Used Car

By: Sally Aquire - Updated: 29 Nov 2010 | comments*Discuss
Used Car Motoring Car Budget Used Car

Depreciation is a prominent motoring concern. The impact of depreciation on a used car can have a big impact on used car prices, as the price that you paid for the car isn't the price that you will get when you sell it. Unfortunately, the true impact of depreciation is not usually obvious until the car is sold, which makes it a dangerous hidden cost. The good news is that used cars tend to depreciate less quickly than new cars, as they cost less to buy in the first place. This article discusses how depreciation affects you if you buy a used car.

What Type of Used Car Should I Look for to Avoid Heavy Depreciation?

As a general rule of thumb, used cars that are between four and five years old will depreciate less quickly than those that are one to two years old. Research has indicated that the BMW Mini is the car that has the least amount of depreciate as demand for it is always fairly constant. If you want to choose a used car based on potential depreciation, a BMW Mini that is between four and five years old or more should stand you in good stead.

If the BMW Mini does not appeal to you, there are other types of used car available that have fairly low levels of depreciation. The Used Car Expert website suggest buying a used Alfa Romeo (2003) that has around 53,000 miles on the clock. This should cost in the region of £6,700 and should only drop around £300 in value if you sell it on within a year. If you leave it longer than this, it could depreciate by several thousand pounds. Another of their suggestions is to buy a BMW 3 series (2004) with 54,000 miles on the clock, which costs around £11,500. If you sell it on within 18 months, it should drop in value by just over £1100. Waiting longer than this can decrease its value by at least £2000.

Running costs are another factor to consider. Generally speaking, cars that run of diesel have lower running costs than those that run on petrol, and this often means that they will have lower depreciation.

Depreciation is a big concern for many drivers, particularly if you are restricted to a motoring budget. If you are restricted to a motoring budget, it is likely that you want to buy a used car because it is more suitable to your budget. Unfortunately, a used car tends to depreciate more quickly than a new car, as it is usually not in high demand unless it is a rare type of used car. When buying a used car, it pays to buy something that will be likely to sell easily at a later date. For this reason, it is not wise to choose a car that is in an uncommon or unpopular colour, such as lime green or pink. This might not be to your liking, but it is more likely to result in a sale later on.

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Depreciation has great impact indeed especially on Cars, it is necessary to have it updated and be aware whether your car is already depreciating as it value depreciates also.
Best Second Hard Car - 8-Nov-11 @ 9:56 PM
What a great thread. I have been involved in the motor trade for over 20 years and find this subject fascinating. As a business owner selling new and used cars it still amazes me the facination of owning a brand new car. I know it goes against my job, but buying a brand new car loses almost 29% in depreciation the moment it drives off the forecourt - yet people still buy them brand new. Why not wait 6 months and buy a second hand car that will cost considerably less to buy and still be in new like condition? It just makes sense to me to do things this way - but please, dont let my comments hold you back from purchasing a new vehicle off me....lol.....great topic guys. All the best, Rob at Car Sale Dallas I have my own blog and would very much like to open a new topic on this very subject. Keep up the great work guys.
Car Sale Dallas - 15-Jul-11 @ 1:23 PM
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