Call0800 066 2888

Spread The Cost

Spread The Cost

Calculate My Loan
Monthly Payment £0
Total Repayable £0
(7.8% APR illustration)
Apply Now
This does not constitute a quote, it's for illustration purposes only. Rates may vary depending on loan amount and individual circumstances.

Car Depreciation 101: Stop Your Car Losing Its Value

June 12, 2016

As a car owner, you’ll want to make sure your vehicle ages gracefully and, more importantly, retains as much of its value over time as possible. Luckily, this is easy to do if you’re armed with the right information. Check out our simple, actionable tips for hanging on to that hypothetical cash so your car never has to lose its sparkle.

Stop Your Car Losing Its Value

What is car depreciation?

Cars are notorious for having a far higher price tag on the day they’re bought vs. the day they’re sold – and this difference in price is what’s known as depreciation. From the moment you drive off the forecourt, your sparkly new motor is inevitably losing value – which can be as much as 15-35% within the first year. Three years on, and your car’s value will have dropped by about 50% from its original price. This is usually due to the general condition of the car – with wear and tear, higher mileage and unexpected damage proving the main culprits when it comes to this loss of value.

Car depreciation is unavoidable, and it’s widely accepted by buyers that they’ll lose money in the long run – but that’s not to say you can’t minimise car depreciation rates through some careful prep and maintenance.

Car depreciation rates

Depreciation rates decrease with age – so a brand new car will lose value much more quickly than a rusty old banger. However, while depreciation will gradually slow, how much you lose in the long term varies depending on the make and model of your car. For example, when it comes to cars that hold their value, smaller, cheaper models can’t compare with the low depreciation rates found with luxurious sports cars. The car’s mileage and the condition in which it’s kept also contribute to the residual value of the car at the end of each year.

Looking into car depreciation rates is crucial in the long term as, if you’re looking to sell it on in the future, a more expensive car with better residuals may end up costing you less overall than a cheaper alternative.

Regular servicing

A full service history is recommended – not only so that the person buying your car can understand any previous problems and repairs surrounding the vehicle before they buy it, but also so that they can see when the car was repaired, how long it was repaired after the fault and, ultimately, whether you showed it the care and attention it deserved.

Make sure to take your car for regular check-ups when it’s not broken, and perhaps even throw on a manufacturer’s stamp – demonstrating that you spent the extra cash to have it serviced by the manufacturer. This is a sure sign that you’ve taken proper care of your car, which can have a massive impact upon its used price, compared with no/incomplete service history.

Registration date

A small point, but something to remember anyway: the date your car is registered can affect the price. For example, if you buy a brand new car registered in December, it’ll be last year’s model as soon as it passes the New Year. But don’t let this put you off buying a car registered late in the year – lots of dealers and even private sellers take this into account, and you can still find some great deals on cars which are about to become old models in a few weeks.

Pimp my ride

Any modifications are done with one person in mind: the owner. Unless your mods are exactly what another person is looking for, they will actually decrease the value of your car – regardless of whether or not you’ve technically improved the vehicle. It’s a little backwards, but don’t worry – there’s still hope. You could remove modifications and reuse any which are compatible with your new car, or sell them separately as parts and make yourself additional money on your car (as its value is no longer reduced by the modifications).

Check your tyres

Tyres are the most important aspect of any car, at least in terms of your car’s value – tyre pressure decreases each day and most drivers don’t check regularly enough. Any lack of pressure or worn treads will decrease the grip your tyre has on the road – negatively affecting performance, since it can’t transfer power as effectively. This, in turn, will use more fuel, causing your mpg to rise dramatically and put more strain on the engine because it’s having to work that little bit harder each day to put down the same power onto the road.

Driving smart is driving cheap

If you drive smart, you’ll not only decrease your fuel usage but also prolong the life of your vehicle. Put simply, this means that, if your car is less damaged or used when you sell it, it will be worth more money. In the same way tyres affect the strain on your vehicle, aggressive driving, braking, cornering and gear changing will also put extra strain on the brakes, gearbox and transmission. Any wear and tear on any component in your car will reduce its value, so take good care of your car and watch how you drive.

Long journey? Add miles to a rental car

Everyone knows it: the lower the mileage, the lower the price – so, if you only use your car for the school run and trips to the supermarket once a week and you’re planning a long journey, consider hiring a car for the trip. This way, you’ll keep that low mileage you’ve got by using your car less and you won’t be throwing away all that potential cash with one trip.

You wouldn’t bake a cake without preheating the oven

…so don’t drive your car away on cold mornings without letting your engine warm up. When it’s cold, engines require more power to start because the battery holds a lower charge and the oil is cold and thick (and won’t lubricate the moving parts as well as it would once it had warmed up a bit).

We also advise against turning your heaters up to full when the car is first turned over – again, because of the lower charge the battery carries in the cold. Drivers are recommended to turn their engines on at least two minutes before driving, and to warm their car with the heaters on half power – not full.

Don’t use every last drop of fuel

If you’re one of those people who loves to get every last drop of petrol from your engine, you’re probably doing more harm than good. Every time you fill up, the sediment from the petrol settles at the bottom of your tank. When you let your car run low on fuel, you use the petrol from the bottom of the tank, which stirs up this sediment and clogs the filter – and you’re leaving the fuel pump uncovered at times when the petrol is moving in the tank, causing it to suck air into the pump which, in turn, causes it to heat up and reduces its lifespan.

Garages are for cars, not for toys

If you’ve got a garage, use it. Too many people have the perfect bedroom to tuck their car up for the night and choose to leave their pride and joy rusting at the kerb, rather than in the garage. Here, it’s safe from UV damage to paintwork and from damage to internal components in extreme cold – from freezing and thawing of parts, causing them to expand and contract and, in extreme cases, crack and break. Rapid heating, as well as rapid cooling, will also worsen any adverse effects of freezing and thawing – so there’s another reason to turn the heaters to low when defrosting your vehicle.

Give your car some TLC

One of the most important and most frequently forgotten methods of retaining your car’s value is to give it a cheeky hoover and wash before you sell it. This can make the difference of a few hundred pounds, so it’s definitely worth doing. If your car is dirty and uncared for, it suggests to the buyer that the rest of the car, and specifically the components, may be dirty, broken or uncared for.

Cleaning your car regularly will help to maintain its value over a longer timeframe, but simply cleaning it on the day before the sale will make a huge difference. It’s a sign that you care about your car and, assumedly, drove it responsibly. If it’s covered in mud and gravel chips, a potential buyer is going to wonder why you’ve been taking it off-road and jump to conclusions, regardless of the reality.

In short, the only real way to maintain your vehicle’s value and prevent your car from depreciating so quickly is to genuinely love and care for your car. Drive it carefully and economically and, most importantly, keep it clean!

101 Stop Your Car Losing Its Value

Cars that hold their value

Looking at car depreciation rates before you sign for a new car is vital if you’re looking to get value for money. If you’re looking for the least depreciating cars on the market, these five models are ruling the car depreciation tables. This selection of shiny new motors will hold their value long after the polish fades – giving you even more of an excuse to splash out.

1. Ferrari 488 GTB Coupe

Not only does this sexy sportscar reach maximum speeds on the race track, but Ferrari has also endeavoured to give its customers even more value with a sweet average depreciation rate of 68%. So although buying this model brand new may set you back a hefty £183,974, when you eventually decide to trade the Coupe in, you’ll still get to pocket two thirds of what you paid.

2. Porsche Cayenne

It’s not hard to see why the classy Cayenne makes an appearance on our list: until recently, it was the slowest depreciating car in the UK. The power and comfort of this model makes it a car in very high demand, and its prestigious Porsche badge is the icing on the cake. With prices ranging from £49,576-£118,455, you can have all the fun you want with this runaround – and when it comes to selling up, you’ll even make an average of 58.6% back.

3. BMW X4

This BMW’s sharp handling and powerful engine make it a top choice for car investors. When buying new, this German beauty comes with a price tag in the region of £37,545-£49,645. The X4 retains most of this value, too – with a great depreciation rate of 59%.

4. Audi Q5

Audi has once again produced a much sought-after high-performer in the form of the sleek and stylish Q5. It’s the stunning design and engineering strength which makes this car well worth the £32,130-£51,845 price label. Any SUV enthusiast will be pleased to know that, when the time comes to move on to a newer model, the Q5 will have retained its value at 59%, too.

5. Range Rover

Depending on your Range Rover’s specs, you can expect to pay anywhere between £74,950 and £164,600. The luxury, comfort, and performance that comes with every model makes it an entirely worthwhile investment. Better yet, these cars will even retain 61% of their initial value – not that you’ll be wanting rid of this classic beauty.

Cars that depreciate the most

Make the most of your money by taking a look at our breakdown of the top five fastest depreciating cars. These models are notorious for their quick depreciation – so while they may seem like a bargain, when it comes to trading in, it’ll be a different story.

1. Citroen C-Zero

At £16,940, this small and sleek model may seem like the ideal city runaround. Out of the city, the C-Zero doesn’t have the engine power to set pulses racing – meaning it’ll only retain 23% of its value when resold.

2. Peugeot iON

This model is the exact same as the C-Zero, so you won’t be driving a hard bargain with either manufacturer for this motor.

3. Volkswagen e-up!

Volkswagen may seem a little out of place on a list of cars that don’t hold their value but, with the e-up! retaining just 26% of its value, this model is not one to invest in if you’re contemplating a good return at resale. The e-up! runs on batteries, and can set you back £24,740 if you’re buying from new – making it a less desirable option, compared with the far cheaper 1.0-litre petrol model.

4. Nissan Leaf Visia 5dr 6.6kW

You can expect to pay £26,885 if you’re buying this Nissan model new. The Leaf boasts game-changing technology and zero emissions, making it one of the best electric cars on sale – and making its high depreciation rate pretty shocking. Retaining only 19% of its value, you could see a loss of over £20k at resale.

5. Renault Zoe i-Dynamique Nav Rapid Charge

Renault’s useful eco-commuter can manage anything up to a 100-mile range, but the public still aren’t convinced. At £25,490, this may seem like an affordable and economic alternative – but in the long term, this car won’t be such a bargain. This model retains only 23% of its value, so trading in after only covering 36,000 miles could mean you’ll lose nearly £20,000.

Apple mac

If you’re looking to upgrade but need a little help financing the car you’ve got your eye on, give our loan calculator a try, or head straight over to our online application form for a quick, hassle-free solution to car finance.

Calculate your loan
Apply now

 

About The Author

Jon Le Roux is co-founder and company director of The Car Loan Warehouse. Being a mad engineering and motorsport enthusiast, I spend more hours than is healthy, watching, reading or talking about cars, boats, motorbikes…..basically anything with an engine.