Car Depreciation

Wangeye08

Hi all,

Has anyone seen a depreciation vs age graph or similar?
Just trying to work out the most cost effective age to buy a new car at. I know there's many other factors, but this is a good jumping off point for looking!

System

I reckon just buy an old banger with 1 years mot, if it lasts another year great, if not then scrap

k3lvc

Wangeye08 wrote: »

Hi all,

Has anyone seen a depreciation vs age graph or similar?
Just trying to work out the most cost effective age to buy a new car at. I know there's many other factors, but this is a good jumping off point for looking!

There's a whole set of variables based on age, owners, condition etc - given that this is the basis of car valuation sites I can't imagine the base data will be floating aroung anywhere for you to graph but let us know if you find it.

I had enough trouble trying to find a database of cars with performance/economy/price/CO2/dimensions that I could filter and gave up in the end

getmore4less

https://en.wikipedia.org/wiki/Exponential_decay

will be fairly close for a lot of cars.

There is another for maintenance costs and cars tend to have a floor as long as you can get them through an MOT.


There are anomolies

feet/lease where you get a flood of cars of certain ages

end of life where the new starting cost will be lower as a model runs out so you get a low initial depreciation till you catch up with the mass out there.

forgotmyname

1st year LOTS!!!

2nd year a LOT

3rd year Quite a bit

4th year a fair bit

5th year much better. I buy them at this point..

loskie

problem with depreciation figures are they are based on list price. That said the Fleet News website has some good info.

Iceweasel

No depreciation vs age graph is going to be accurate in the present economic climate.

In the past I have bought at around 2 years old and sold at 5 year old.

But with 23% 'discount' available on several makes these days I decided to buy a brand new car this time.

I'll sell it after 5 years I imagine but how will I calculate the depreciation - using the list price? Or the price I paid for it?

Alt

The What Car car depreciation calculator might give you a 'very' rough idea of what a car depreciates over the first 4 years


http://www.whatcar.com/car-depreciation-calculator/


Alt

Hintza

Go to ebay and look at what has sold you can then remove erroneous results and average them out. One thing for sure it will be the closest you will get for real life prices.

Wangeye08

Thanks for all the replies. What we were looking to do was to trade in our car shortly, and supplement it with another loan of the same value, do this every couple of years (keeping the loan repayments the same), so progressively getting a better car each time. So having a car at a period where it depreciated at it's lowest level, but still fairly new and reliable is important for this to work.

bowlhead99

Wangeye08 wrote: »

Thanks for all the replies. What we were looking to do was to trade in our car shortly, and supplement it with another loan of the same value, do this every couple of years (keeping the loan repayments the same), so progressively getting a better car each time. So having a car at a period where it depreciated at it's lowest level, but still fairly new and reliable is important for this to work.

So for example you buy a car for £9k of which £4500 is borrowed at £150pm over 3 years.

After the 3 years the car has lost 45% of its value and is worth £5k. You sell it, borrow another £4500 for another £150pm and now you have £9500 for a car. You might think you're getting a progressively better car each time but although the second one is a later model so probably drives better or has more gadgets, it probably isn't a relatively better condition car, because a £9500 car in 2019 isn't going to be a lot better than a £9000 car in 2016, it just reflects general price inflation of a couple of percent a year.

People talk about cars losing most of their value in the early years which is true but the "exponential" graph is useful because it shows that although you lose a much larger amount of cash in the first three years, what you lose is a similar percentage over the first three years as the second three and the next three. Which might easily be 35% or 45% or more depending on model. And if it's 45% or more you are going to have to pay down your loans a lot faster than every 3 years, for each successive car to be an upgrade.

As cars get older (much older than 5 years) the depreciation does tend to flatten off, both as a percentage and in actual pounds. Though servicing costs can rise. Good thing about being on that "aged" part of the curve and spending higher and higher amounts of money, you will likely be able to afford to get into some pretty great cars compared to what you'd get for your money if buying new. But go too far and it becomes a bit bangernomics.