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Protecting the Investment Made in a Used Car

By: Scott McBride - Updated: 25 Oct 2016 | comments*Discuss
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As soon as a car is bought its value starts to drop. Depreciation – the term used for the decrease in a car’s worth over time – is the greatest hidden cost of motoring as it only becomes apparent when the time comes to sell a car. Yet certain steps can be taken to minimise the impact of depreciation and ensure a car is worth more for longer.

Luckily for those buying a used car, the heaviest depreciation of a car’s value occurs in the first three years of its life. The biggest drop in value a car suffers is the initial one when it is driven off the forecourt by its first owner. For this reason, savvy buyers will give serious consideration to a nearly new car. Franchised dealers usually have plenty of these low-mileage cars to choose from and most will come with a guarantee, warranty and full service history.

Depreciation is often measured as a percentage of a car’s value after three years or 36,000 miles, compared to its price when new. If a car depreciates heavily, it may be worth only 30 per cent of its original value after three years, and even a car with low depreciation can expect to lose at least 25 per cent of its initial worth.

Buy the Best

The best way to beat depreciation when buying a used car is to buy the best car in its class, as it is the one that will continue to be in demand for the foreseeable future. Highly sought after and rare cars tend to depreciate at a slower rate too, but be aware that a car in vogue may lose value quickly if the trend changes.

Expensive cars produced by manufacturers not known for building luxury cars are often among the fastest to depreciate. While these cars may be big on performance and specification, there is a limited market for them and so it will be more difficult to find a buyer willing to pay an amount close to the original investment when the time comes to sell it on.

Choosing a diesel-powered car instead of a petrol-powered one may offer a buyer some protection. Diesel cars have lower running costs, which has led to an increase in demand as fuel prices rocket. Petrol engines mean expensive maintenance bills and higher emissions will put off environmentally-friendly drivers.

Newer Models Retain Value

A newer model in the showrooms will retain its value longer than an older model about to go out of production. Sometimes, however, a last of the line model will carry a much-reduced price tag to account for the fact. In this case, the older car may depreciate less, as the less paid for the car in the first place, the less there is to lose.

By keeping a car for a long time it is possible to reduce the amount of depreciation suffered per year, but unless a buyer is able to pick out the next collectable classic – the ultra-rare car that will one day increase in value – then depreciation is a fact of life.

As well as taking steps to guard against depreciation, a buyer should take protection against accidents, fire and theft by getting appropriate insurance cover. For additional security it is worth fitting a car alarm if one is not provided by the manufacturer as standard.

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I bought a 2007 Audi A4 on 1 Jun 2007 with 90K on the clock. On test driving the vehicle I did not notice any faults except for the front disc which had been an advice on the last MOT. I took the vehicle to my local garage on the first week of September as the brake warning light had come on which was due to worn brake pads. When I collected the vehicle, my mechanic advised me that the dual mass flywheel was on its way out and it was an expensive repair. At the time of being informed of the clutch problem I had only driven the vehicle just over 2400 miles since purchase. I spoke to the garage where I bought the car about resolving the issue but they were not willing to help. I brought to their attention the Consumer Act of 2015 to which I was told that garages can offer whatever length of warranty they liked on a used vehicle if at all. The garage is covered by the AA Dealership Promise so I have tried to use the AA as an intermediate to resolve the problem. The AA did speak to the garage but informed me that the garage told them that because I signed a Pre-delivery Inspection check list stating everything had been checked on the vehicle as working correctly that I do not have any comeback on the garage, is this right? I've even been through the Consumer Ombudsman but the garage refused to deal with them so there was nothing they could do. Do you think I have a case if I was to pursue this through the small claims court?
Andy - 25-Oct-16 @ 7:03 PM
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