Used Car Buyers: Appreciate Depreciation
Here at HPI, we are urging used car buyers to make sure they factor in the depreciation of a vehicle when considering a purchase, as this could save them thousands of pounds when it’s time to sell it on.
Whilst there isn’t a magical formula for calculating depreciation, there are clues that can help point the way for used car buyers. Comparing a vehicle’s original and current price will give an indication of its depreciation rate – fairly flat or plummeting like a stone? The newer the vehicle, the steeper the devaluation; the older it gets, the more it is likely to flatten out. Popular, well maintained, or cult vehicles can hold or even increase their value if bought prudently.
Depreciation can be a ‘hidden cost’ and buyers who forget to take it into account could be in for a nasty surprise when they come to sell and find its value has plummeted. All too often, when we first see our dream car, we just want to jump in it and drive away, making it all too easy to forget about the day when we will want to sell it, in a few years’ time. Careful buyers will do their research to find out the history of the vehicle, as well as how much the vehicle tax will be, the CO2 emission levels, and how expensive on fuel it could be – all information that HPI provide as standard** with the HPI Check.
Mike Hind, of CAP the used car pricing experts, adds: “Depreciation is the biggest single cost in owning a car and it can vary massively between brands”. Understanding what your intended purchase will be worth in the future will help you avoid a potentially costly mistake. It might even mean you can afford to spend more up front on the car you always wanted, if it’s going to lose less money in the long run.
Taking the depreciation of a vehicle into account means buyers can get the best price when they come to sell it on. Beware rock bottom prices, in the hope of making up for depreciation later down the line. True bargains are very rare. All too often, if it looks to good to be true, it normally is. Better to be safe and walk away. A little bit of research into the market and where it is likely to go, could save car owners thousands of pounds.
** Information provided where available