Car Depreciation: Why Buying Used Could Save You Loads
It's an unfortunate fact that cars never hold their full value, and some lose it faster than others. In fact, car depreciation is a cost of car ownership that can often be overlooked. If you're smart though, you can use deprecation to snag a used bargain. Read on to find out how.

What is car depreciation?
As soon as a new car is driven by its first owner, it begins to lose value, and that steady drop in resale price is called depreciation. This loss of money over time is affected by factors like age, mileage, the introduction of newer models and even changing fashions. Though it varies between cars, the simple fact is that all cars depreciate – it’s just a matter of how much, how fast, and how can you use that fact to save some coins.
New cars depreciate the fastest
A brand new car loses a huge chunk of its value in just the first year, sometimes up to 35% or more. By the end of the third year of the car’s life, it will likely be worth less than half of its original value. That’s terrible news if you’re buying a new car but great news if you’re a savvy used buyer.
Buy used and save loads
As a car’s value drops by a massive proportion in the first year, buying a nearly-new vehicle can save you a fortune. Buy a three-year-old car and you can bank over half, sometimes three-quarters of the new price.
Letting the new-car buyer take the hit on depreciation is a smart move but you also want to make sure it’s been well cared for. If you’re buying a car that’s one year old, it will still be under the manufacturer’s warranty and a few may still be even after three years. If your used bargain is out of warranty though, it’s likely that any problems will have already been dealt with. But you’ll definitely still want to make sure it’s been regularly serviced. Read our expert advice on how to save big on your next car for useful tips.
How to maximise your savings on a used car
Knowing what impacts depreciation can help you bag the biggest bargain.
Original value
As depreciation is a percentage of the original price, the pounds value of this can be vastly different depending on whether the car is a small, budget car or a large car from a premium brand. That means going for a Mercedes S-Class could save you the best part of £100k compared to new. Keep in mind though that the purchase price will still be higher and so will the running costs.
The market
Car types fluctuate in terms of popularity – for example, SUVs are very popular now, while estates and saloons are less so. The same is true of colours – black and white are always in favour, but bold, en vogue colours can go out of fashion quickly. If an estate car in a striking colour works for you though, you’ll save a fortune by ignoring passing fads.
Reputation is another aspect to consider. Car manufacturers can sometimes struggle to shake a poor one even when it’s no longer deserved, whether that’s about quality or reliability. Whatever the price of their new cars, the market will have its say, and depreciation is higher as a result of disinterest from some buyers. By doing some research rather than listening to the crowd, you can get a great car for less.
Running costs
Buyers understandably look for cars that are cheap to tax and insure or are fuel-efficient, but if you now have low insurance bills or do very few miles, that might not matter so much to you. Our expert advice article on how to calculate the running costs for a car will give you lots of handy tips.
High mileage
Vehicles with above-average mileage will have depreciated more, but if you can get reassurance that the car has been looked after and has done mostly motorway miles, you can save a small fortune. Plus, if you don’t plan on doing too many miles yourself, you’ll balance out the mileage and lessen the deprecation when it comes time to sell on.
Depreciation can have a huge impact on lowering the value of new cars very quickly. It means that around a third of a car’s value can be lost in the first year and over half after three years. Using our guide on why and how this happens could help you save loads of money when buying used.
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