Whether you’re trading in an old banger or selling your most prized possession, it’s pretty much inevitable that your car is going to be worth a lot less than what you paid for it.
The dreaded D-word – otherwise known as depreciation – is the single biggest cost of running a car, and every owner’s nightmare.
That’s why we’ve written this guide – to help car owners better understand what affects a car’s value in order to guarantee a decent return, whether you’re selling your car privately or to a dealer.
The true value of a used car is the amount that a buyer is willing to pay for it, but our free car valuation calculator will help you estimate its current market value, which is useful for setting a fair and realistic asking price.
While there are wider economic factors at work, the amount you can expect to receive for a used car depends on what you paid for the car initially and how well it has held its value over its lifetime.
A car’s depreciation is simply the difference between the price you paid for it and its value today. As a rule of thumb, a new car loses 15-35% of its value in the year after it was bought, and around 50% of its value by year three.
So, if you buy a new car for £20,000 today, it’s likely to fetch you somewhere around £16,000 in 12 months’ time and £10,000 in three years.
Below, we look at how five hugely-popular models hold their value using data from over 30,000 transactions. The charts were calculated by comparing new car values against their prices at auction. These prices will always be less than the car’s actual market value, so if you own one of these models, you can rest assured that it’s unlikely to depreciate quite so fast.
There is a whole range of factors that affect the rate at which your car loses value and how much people will be willing to pay for it.
Some of these factors, like age and the number of previous owners, are best considered before buying a car. You might find, for example, that buying a five-year-old car with low mileage is better value than buying a brand new car, as the previous owner has already taken the biggest depreciation hit.
The manufacturer of your car is also worth taking into consideration. Before buying, make sure you look at car surveys carried out by the likes of Which? and Warrant Direct to see how the manufacturer is regarded by its owners. This is not only an indication of the car’s reliability but also how well it will hold its value.
Depreciation is an inevitable part of owning a car. While you can’t prevent it, there are plenty of things you can do to slow it down.
The condition of the car is a controllable factor in depreciation and can make a real difference to your car’s market value. Looks can be deceiving, but keeping your car clean and tidy – both inside and out – can help win over a bartering buyer, as can repairing any signs of damage.
Similarly, the month that you choose to sell your car can also influence the price it fetches. As simple as it seems, convertibles tend to sell for more at the start of summer, while 4X4s go for more as the days get shorter.
It’s not hard to see why the Ford Fiesta is Britain’s best-selling car – it holds its value remarkably well over the first couple of years when compared to similar models. The Fiestas that we’ve traded have maintained a residual value of around 50% after the third year of ownership, losing a third of their value in year one.
With more of a premium feel than its competitors in the entry-level market, the German-made Volkswagen Polo tends to lose around a third of its value in its first year and a little more than half after three years of ownership.
French cars don’t have the best reputation for holding their value, but looking at our sales data, the stylish Renault Clio is still worth more-or-less half of its original value after three years on the road, depreciating by 34.1% in the first year.
We tend to see a sharper rate of depreciation for the immensely-popular Ford Focus in the first year – around 40% – than similar models, but this levels out by year three, holding an impressive residual value of more than 50%.
The Vauxhall Corsa is Britain’s second favourite car, but the models we value tend to depreciate considerably faster than other cars in the same class. On average, the car loses a whopping 50.4% of its value in the first year alone, and by year three, it’s worth less than 40% of its original value. .