How buying a second-hand motor that loses its value fast could be the way to make BIG savings
CARS that quickly lose value are touted as bad news – but not if you are in the market for a second-hand motor.
Industry bible What Car?’s annual “depreciation duffers” report this week named and shamed the cars worth as little as a quarter of what they cost after just three years.
But look at it another way and families who don’t mind a nearly-new motor can get a £65,400 Jaguar XJ for £18,800 or a Maserati costing £74,320 new for little over £20,000. On a more practical note, a £20,510 Fiat Tipo would be £5,650 or a Peugeot 308 £6,150 — more than £15,000 cheaper.
So it could well be worth a trip to your local dealer. The industry has moved on since the bad old days of salesmen on whom the Fast Show’s cash-in-hand chancer Swiss Toni was based.
Most of us now buy new or nearly-new cars on credit, so the Jag — on a standard hire purchase from a dealer — would be £550 a month over three years, or less with a better value or longer loan.
Many think fuel is the biggest cost of running a car. But for families buying new, the main cost is depreciation — the amount of value cars lose over time. The starkest depreciation is in the first three years. It slows until the eighth year, when it holds very little value, What Car? says.
So if you plan to keep it for a few years, you have got yourself a bargain.
But what if you really want a new car? There is good news for you, too, since some retain as much as 70 per cent of their value. The bad news is that most are high-end models.
It may cost £38,675 new but after three years the Range Rover Evoque R-Dynamic is worth more than £27,000. That is an £11,000 hit but the smallest drop in value in percentage terms.
Most of the others in the top ten are also high-end. In fact, the rest of the top eight is made up of four Porsches, two Audis and an Alpine — the cheapest of which is one of the Porsches at £47,254.
The other two are less expensive Toyotas, with a £24,255 Prius hanging on to 63 per cent of its value after three years.
Steve Huntingford, editor of What Car?, said: “Depreciation is often overlooked when people are deciding what car to buy.
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“But while other running costs are worth considering, they rarely add up to the amount a car loses during the first few years of ownership, so you can save thousands by choosing carefully or using a car’s heavy depreciation to push for a bigger discount.
“As to why the bottom ten are the bottom ten, it’s simply down to supply and demand. For example, there are a lot of mainstream family cars in there, where the buyer has plenty of alternatives if an owner isn’t prepared to sell for an attractive price. Cars come in and out of fashion, and so do fuel types.
“In the case of the Evoque, Land Rover has always been able to sell as many as it can make because the looks appeal to a lot of people, as does the Range Rover badge. Over time the Evoque will almost certainly drop out of the top ten, but it will never be a car that suffers heavy depreciation thanks to its badge appeal.”
How different car types match up…
- Electric — 47%
- Petrol — 43%
- Automatic — 43%
- Manual — 40%
Residual value after three years/30,000 miles.
Source: The Sun Motors – How buying a second-hand motor that loses its value fast could be the way to make BIG savings