Friday, 20 July 2018

TOOT TOOT BEEP BEEP

Feet Up Car Window
Camper Van on the Beach

Earlier this year I talked about my experiences with buying a used car here – I wanted to follow up on this with some further information about the positives of buying a used vehicle over a newer one.

Buying a car is likely the second biggest purchase that a person generally makes, the first being, buying a house. And if you want a quality vehicle that isn’t going to break down, you’re probably going to have to pay a pretty penny for a new ride. The average cost of a brand new car was about £25,858 in 2015, compared to £14,492 for a used one.

Bringing me nicely on to;

CAR DEPRECIATION

According to the AA; ‘Depreciation is simply the difference between the amount you spend when you buy a car and the amount you get back when you sell or trade it in. It's often overlooked or ignored when buying a new car but for many, depreciation is the single biggest factor affecting running costs adding more to cost per mile than fuel.’

The average new car will have a residual value of around 40% of its new price after three years (assuming 10,000 miles/year) or in other words will have lost around 60% of its value at an average of 20% per year.

While the percentage drop may be similar the actual cost of deprecation clearly varies hugely between a small cheap car and an expensive luxury car. Buy a car for £10,000 and it might cost you £2000/year in deprecation and be worth around £4000 after three years but spend £50,000 and the bill for depreciation will be more like £10,000 per year.

Unfortunately it's not quite as simple as that though because, as well as age, depreciation is affected by mileage and condition and also varies a lot between different models. Focussing simply on purchase price when you buy a new car might mask the possibility that a more expensive car with good residuals could cost you less in the long run than a cheaper car the value of which drops like a stone.

USED CARS

Nearly New


Depreciation slows as the car gets older so you may find that a nearly new car (one to two years old) is better value than a brand–new one.

If your annual mileage is low then a high mileage ex-fleet car could be a good buy. You get the benefit of higher depreciation when you buy but the total mileage might be closer to average for its age by the time you come to sell.

Five Year Old Car


Buying a five–year–old car may be an even better option. You won't get the latest features, but it won't lose so much in value. And you won't be shelling out so much each month on interest to repay a loan.
But it's only better value if your mileage is low – under 10,000 miles a year.
Your repair and maintenance bill will be higher and less predictable the older your car is and these costs will increase as your mileage goes up.

Eight Year Old Car


By the time a car reaches this age it's pretty much done all the depreciating it's going to do. Risks are higher too though and it's more likely that a one off repair bill could cost you as much or more than a year's depreciation would have done on a newer car.

So if you are looking to find a used car to avoid too much car depreciation, you can enjoy hassle-free booking of used cars at KAP Motors Folkestone Branch!

Happy Car Hunting…

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