What Are the Main Causes of Depreciation?

Assuming that you eventually sell your car, depreciation is something that every owner will have to deal with. While it may be an inevitable part of ownership, though, that doesn’t mean there isn’t steps you can take to reduce the effects. Over the long-term, these can have significant effects when it comes time to part ways with your vehicle.

What Is Depreciation

Put simply, car depreciation is the difference between a vehicle’s value when you buy it and when you come to sell it. While every make and model will vary, almost every new car will lose a significant amount of its sticker price as soon as your drive it home from the dealership. In the first year, some cars could lose as much as 40% of their original value. After three years on the road, you should expect the vehicle to have depreciated between 50-60% in value.

What Causes Depreciation

There are a multitude of different factors that affect how much your car will depreciate in value. Chief among them are how many miles you drive, your service history, and the condition of the vehicle. The average Brit drives around 10,000 miles a year. Generally speaking, the more miles you drive, the problems are likely to accrue so expect vehicles that have been heavily used to be less desirable. You should have a fully detailed service history ready for any potential buyer so they can see any repairs that have had to have been made to the vehicle.

Which Cars Perform Best

The make and model of your vehicle will also have a significant effect on its potential resale value. Some buyers will be attracted to manufacturers who have a reputation for reliability, like Honda, Suzuki, and Toyota, while others will be more interested in vehicles that are fuel efficient, like Citroen C3 or Dacia Sandero. However, when you take a look at a list of manufacturers with the lowest rate of depreciation, you’ll see it’s largely dominated by premium brands like MINI, Audi, and Mercedes.

How Can You Avoid It

For drivers who don’t want to deal with the hassles of depreciation, fortunately there’s just the solution for you. Leasing a car, rather than buying it outright, gives you the ability to drive the model you want without having to worry about the future costs of ownership. When your contract is over, you’ll simply return the vehicle to the lender. You’ll then have the option of choosing newer model or extending your current deal. Take a look here for more information. You may find this to be the ideal solution for your use-case scenario.