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What is car depreciation and how to I avoid it?

Depreciation is a word that floats around within the car and automotive industry but do you know what it means and how to avoid it? If you would like to find out more, read on for our take on it.

Simply put, it is the difference between the amount you pay for your car, and what it is worth when you come to sell. It sounds simple and small but it can actually be a hefty amount of money.

A common misconception is that cars on finance are not subject to depreciation, when in fact they are. For example, if you buy a new car on finance, it will be worth significantly less at the end of your finance agreement, which could be tricky if you want to pay a balloon payment and own it, with PCP.

Avoiding depreciation altogether is hard, but being as cars usually lose most of their value in the first three years of them being on the roads, buying used is a safer way to avoid or minimise that fallout.

By buying a used car, you have let most of that depreciation happen, and whether you choose to purchase outright or go for finance, you are setting yourself up better financially for when you no longer want the car.

If you are concerned about depreciation and want to speak to an expert, we have a whole team of them. Get in touch online or give us a call and we can talk you through it and help you find a solution for your next used car.

We are finance specialists at heart and have decades of experience in helping customers find finance and drive away happy. Whether you know all about finance or need some help and guidance, we will be here for you and will explain everything simply, so you don’t need to get your head around the jargon or worry about learning your APR from your PCP.