Oct 062016
 

When it comes to buying a car there are numerous factors to consider, and ultimately we all want to get good value for the money we put into a purchase. Value for money when buying a car doesn’t just involve the price you pay when you buy it though – more often than not we need to consider the value we’ll get from re-selling it in the future.

Depreciation is one of the biggest factors to be assessed when making this decision, but it can frequently be overlooked in favour of style and desirability at the time.

Most cars depreciate at a rate of around 20% per year over the first three years of ownership, but there are a number of things to take into consideration which could help you retain as much value as possible thereafter.

The Key Factors:

The general reliability of your car is crucial in reducing depreciation – certain manufacturers have a reputation for unreliability so a bit of brand research is a must. The less you have to spend after services and MOTs, the better it is at the time and in the long run. In terms of MOTs and services, it is key to maintain a full service history to illustrate reliability as well.

Fuel type and MPG can have a significant impact on depreciation. Typically, diesel cars are more economical but the gap is closing as petrol engine efficiency improves, so newer petrol models should maintain value well. Looking ahead, hybrid and alternative energy vehicles will be a good option as, due to increasing demand, value will be more solidified. In addition to economy, overall mileage has a huge effect on value as the higher the mileage, the lower the value.

By-and-large, the bigger the car the higher the running and maintenance costs will be, so the resale value for superminis and hatchbacks is usually very good. Buying a car with lower running costs, including fuel, will in turn lead to a lower road tax which is highly desirable in a second-hand car.

A car’s value also affects insurance – for a lower value car an owner could consider third party or third party fire and theft policies to reduce their premiums. Insurers also study information on estimated cost of repairs and potential repair time, so reliability and depreciation has a major bearing on the overall cost of insurance.

The original cost of the car is worth bearing in mind, as if you take into account 20% depreciation per year during the first three years, a car worth £60,000 will depreciate by £12,000 per year as opposed to a £20,000 car retaining far more of its value by losing £4,000 per year.

Minimising Depreciation / Maximising Value

  • Maintenance – taking good care of your car on and off the read is key. Damaged bodywork and interiors will decrease value, as will worn out engines that have been aggressively driven. Buying a Haynes manual for your car is a great way of helping to reduce running costs too.
  • Don’t buy brand new – buying a ‘nearly-new’ or a five-year-old car will help you avoid the stage where the most depreciation occurs. Buying an eight to ten-year-old car is also an option, as this won’t depreciate any more than it already has, but this needs to be weighed up against potentially higher repair costs.
  • Don’t modify, choose extras wisely – ‘boy racer’ modifications such as spoilers, noisy split exhausts and flared wheel arches tend not to be desirable in the second-hand car market. However, options such as sat-nav, leather seats and air con are highly desirable and will be valuable additions.
  • Consider GAP insurance – because your car starts losing value the moment you drive off the forecourt, a GAP insurance policy is worth investing in if you’re paying for the car on finance. So, if you’ve bought a relatively new car and anything unforeseen happens to it the GAP insurance will cover the value lost by depreciation.
  • Leasing – this can be a good option in terms of keeping the running costs and repairs down, as they are generally included in your fixed monthly payments. Particularly useful for those that will have high mileage, but keep an eye out for mileage limits in the contract as they can be very costly.

Depreciation is something we all have to tackle if we’re buying a car, but hopefully with these tips you can make the most out of what is for many people, not just a means of getting around, but a great way of having fun and extension of their personality.

Dec 072015
 

Another week begins the motor world and we here at Warranty Direct have a selection of the news stories catching our eye lately.

Why WeBuyAnyCar price ‘guarantees’ deserve to be scrapped – This Is Money

 

 

 

 

This Is Money takes a look at the car buyer’s inspection process following reports from several upset readers who have had bad experiences selling their car to the company. Readers are finding their online guaranteed price is knocked down considerably for the smallest reasons after the company inspects their vehicle.

Nissan ramps up in Sunderland – The Telegraph

 

 

 

 

 

 

Following their success in the mass production of the Nissan Qashqai, the North East plant has been chose to build Nissan’s luxury Infiniti model by the Japanese car giant. This will come as part of a £250 million investment in the factory, a landmark move seen as a triumph for the British industry.

£60,000 electric car has UK’s slowest depreciation rate – Manchester Evening News

 

 

 

 

 

 

It may have had some issues recently with a mass recall due to a faulty seatbelt mechanism but there are positives for owning a Tesla Model S. The electric car has the slowest depreciation rate compared to other cars and this has become an increasingly important factor in products such as GAP Cover Insurance.

Don’t forget we share more motoring news through our social media feeds so follow us on Facebook, Twitter and Google+ to be up to date with the motoring world as well as the latest news from Warranty Direct.

May 282014
 

Mini (Blog)MINI has the strongest UK residual values of 34 car manufacturers, an independent study by Glass’s has found. With an annual average depreciation of just 16.4 per cent, MINI customers benefit from the strongest residual values in the industry. Glass’s study, scrutinised cars at one, three, five and seven years old to obtain fair depreciation figures.

MINI’s industry leading depreciation figures means UK customers can experience depreciation up to 10 percentage points less on their vehicle per year compared with the worst performing manufacturers. This can amount to saving of thousands of pounds when selling the vehicle.

Andrew Jackson, Head of Analytics at Glass’s, comments: “Considering that MINI operates within a classically high-RV-performing segment, combined with the desirable nature of the brand, meant that even for vehicles aged seven years, the percentage of cost new that can be expected from a MINI was appreciably more than any other brand.”

As well as strong residual values offered by entry level MINI models, many of the brand’s options and customisation choices further improve residual values for customers come resale time. This translates into affordable leasing rates ensuring MINI customers can enjoy the options they want on their vehicle for less.