How to beat depreciation
Car seller's guide
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.
How are cars valued?
10 things to know when buying or selling
Age
Most cars lose around 50% of their value after three years on the road.
Mileage
Cars that exceed 10,500 miles per year depreciate at a faster rate.
Service
Cars are worth more if the owner has recorded its service history.
Size
Bigger cars depreciate faster than smaller, as they are more expensive to run and less desirable.
Conditions
Damage to the interior or exterior reduces a car's value significantly.
Reputation
Owner surveys show how manufacturers and models are rated by customers.
Owners
Cars with multiple previous owners are worth less than those with just one.
Colour
White cars hold their value better than any other colour.
Interior
Leather furnishings add value, as does in-car tech.
Modifications
Spoilers, alloys and LED lighting only diminish a car's value.
What is car depreciation?
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.
How fast does my car depreciate?
Below, we look at how three popular models hold their value using data from thousands of 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.
What affects car depreciation?
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.
How to slow down your car's depreciation
10 things to know when buying or selling
Mileage
The average is 10,000 miles per year.
Clean and maintain your car regularly
Hire a professional valet service before selling.
Fix any minor damage
You're bound to recoup the cost of any minor repair work during resale.
Get and up-to-date MOT
Most buyers want a car with more than three months left on the MOT.
Keep a service record
Maintaining a stamped service book can add 25% to a car's value.
Don't go mad on mods
You might think those alloy rims are awesome, but few buyers agree.
Don't get replaced
Sell your car before a replacement model is released.
Know when to sell
Convertibles sell for more in summer and 4X4s fetch more in winter.
How to maximise your return
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.
How much is my car worth?
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.