Depreciation: how much does it affect your car-buying habits
Discussion
I tend not to worry too much about depreciation but I am obviously pleased when I don't make a large loss.
My next purchase is a Jeep Grand Cherokee Summit and while the 2014 model is getting rave reviews, I know that I am in for a large hit given it isn't as popular here in the UK as its competition. I'm happy with that and trading the depreciation off against rarity - I haven't seen another one on the road in months.
My next purchase is a Jeep Grand Cherokee Summit and while the 2014 model is getting rave reviews, I know that I am in for a large hit given it isn't as popular here in the UK as its competition. I'm happy with that and trading the depreciation off against rarity - I haven't seen another one on the road in months.
EskimoArapaho said:
I love depreciation, and always choose (used) cars where someone else has taken the hit. (Thank you very much, whoever you are.)
Ditto.Out of self interest I wouldn't want to convince those who buy new cars to stop doing so, but, unless you're buying something very special, I think you're mad. :-)
ATG said:
Out of self interest I wouldn't want to convince those who buy new cars to stop doing so, but, unless you're buying something very special, I think you're mad. :-)
Very few people buy new cars these days. They're mostly owned by the manufacturer until they're three years old then sold second-hand. The people who you need to thank are those who rent new cars, helpfully paying the initial depreciation for the rest of us. 
J4CKO said:
I could go and spend twenty grand on a diesel Astra, people do, or I could spend 20 grand on a Noble, Porsche, TVR and god knows what else and lose very little, I do wonder how people on average wage who buy new cars swallow the depreciation,
I don't think they do really. Cars like that are mostly bought on finance/PCP/lease (possibly 0%). To be fair, the three new cars I spoke about in the OP were all bought on finance and cost me between 3000 and 4000 pounds apiece in payments. In fact, when I traded the Fiat, the buyout was about 4000 pounds and I sold it for 5000, so I got some extra money back in my pocket! The MX5 (a 9 month old mk2) was probably my least sensible purchase because the buyout was 750 pound more than what I sold it for (as I said before though, I could have done worse if I had bought something else). In hindsight, I could have bought a decent mk1 MX5 for 3000 pounds though (or even the next car that I bought, an E30 325i Cabriolet), kept the car rather than sell it and still had a relatively low depreciating asset that was worth something at the end of it.The VW and Fiat were on PCP though and I'm pretty sure what I spent in payments was about the same as the depreciation on the car (had I paid cash), if not a bit less! Less painful than losing nearly $6000 of my hard earned in a year on that Jeep!
Finance/PCP/lease seems like a pretty good way to buy a new car, as long as you don't bail out too early i.e your car has depreciated more quickly than you are paying it off. People get themselves into trouble because they either buy a car that is unsuitable for their requirements or one they can't really afford and finance over say 5 years and then when they want to change it after 1-2 years, they have to finance their negative equity and are still paying for their old car on the payment for their new one! If you keep the car until the end or near the end of the agreement (provided the interest rate is reasonable) then you should at least break even or have a deposit on your next car or money in your pocket when you sell!
I recently leased a new Toyota for my wife over 5 years and hopefully we'll be able to afford to "upgrade" it after 4 years. Provided you stick to your mileage allowance, can you get into negative equity on a lease or 0% finance? I could have got a similar size/spec Kia on 0% finance for a similar payment but that would have been over 7 years! I guess I chose the Toyota because I thought it would depreciate less, even though I'm paying 1.99% interest and I didn't really want to keep this car for 7 years!
Edited by white_goodman on Friday 22 August 16:35
Yes it matters to me...
I use it as a way of saving up for 3 years, meaning i can get something more expensive next time/better/faster. So it means i suppose i can keep working up with putting away the same amount every month.
I have got it wrong in the past...
E46 M3 vs E30 M3! DANG!!!! I bought the E46.. great car and dont regret it. But when i look at the hit i took, and gain i would have made on the E30... Its a bit s
t.
I use it as a way of saving up for 3 years, meaning i can get something more expensive next time/better/faster. So it means i suppose i can keep working up with putting away the same amount every month.
I have got it wrong in the past...
E46 M3 vs E30 M3! DANG!!!! I bought the E46.. great car and dont regret it. But when i look at the hit i took, and gain i would have made on the E30... Its a bit s
t.It affects my purchasing decision as much as any other cost of ownership.
I work out what I want to (/can afford to) spend on running a car, and then plan my purchase accordingly.
I know someone who's more than happy to spend £30-40k a year on owning/running cars, and depreciation forms the majority of that. He knows that, and is happy to pay that price.
I don't have that much money, so I'm not willing to pay that price. I look at the older/cheaper end of the market.
I work out what I want to (/can afford to) spend on running a car, and then plan my purchase accordingly.
I know someone who's more than happy to spend £30-40k a year on owning/running cars, and depreciation forms the majority of that. He knows that, and is happy to pay that price.
I don't have that much money, so I'm not willing to pay that price. I look at the older/cheaper end of the market.
Yes, I take depreciation into account but it is just one factor. I compare the overall cost of ownership and purchase/acquire the car on the most efficient use of my cash. My wife's Tiguan worked out cheaper to lease for 3 years and then buy at the end of the term than to buy outright. It also took out the risk of depreciation for me as well. (I'm in the US so it may not be possible to take advantage of this in the UK)
I have a company car so depreciation didn't play a part of my decision.
I have a company car so depreciation didn't play a part of my decision.
ATG said:
EskimoArapaho said:
I love depreciation, and always choose (used) cars where someone else has taken the hit. (Thank you very much, whoever you are.)
Ditto.Out of self interest I wouldn't want to convince those who buy new cars to stop doing so, but, unless you're buying something very special, I think you're mad. :-)
Some of the cars even made me money...like the great 1.9 TDI Skoda Fabia. Bought for 928 quid with 8 months tax and MOT and 91K on the clock including all the fees and taxes
Passed MOT 8 months later without a single advisory and was sold for 1100 to a chap who came all the way from Manchester 
greygoose said:
I don't really think about it, I would just get the car I want, having said that my 1M has only lost about 5k in the three years I have had it which is far better than I expected.
Only lost 5k in three years! 
My Integra DC5 has lost 5k in eight years and even then I'm not cock-a-hoop about it.
Back in the day, I couldn't afford anything new enough to be affected by depreciation. Nowadays our mileage is so low, relatively speaking, that it only makes sense to buy our cars after the initial depreciation hit's been taken by someone else.
But thereafter I don't much care.
Our current DD is a case in point: Ex-motability, 3 years old and 4,000 miles – for 40% of the new list price. We aim to keep it for 7 or 8 years (when it'll still only have done c70k miles) and it shouldn't cost us more than a grand or so a year in depreciation, which I don't even think about.
But, under the current circumstances, it'll never make sense for us to buy a new car while we can buy a 2 year old one for half the price.
But thereafter I don't much care.
Our current DD is a case in point: Ex-motability, 3 years old and 4,000 miles – for 40% of the new list price. We aim to keep it for 7 or 8 years (when it'll still only have done c70k miles) and it shouldn't cost us more than a grand or so a year in depreciation, which I don't even think about.
But, under the current circumstances, it'll never make sense for us to buy a new car while we can buy a 2 year old one for half the price.
Since being coerced into buying a fiat Marea weekend by my Ex(buying a car like this is always going to put a strain on relationships) which I paid £10k for traded in 3 yrs later £500!! And that was £50 above book. I have tried to be a bit more savvy with painful consequence. Traded for a 3series £10k 4 yrs trade in £2800 for an R36 estate. £25500. 3yrs later £13200 so on that basis over 10 years £29300 down the pan. Have I learnt? Well maybe a little. Back to a bmw 3series e90. 330i. Paid a bargain 5300 18months ago it books at 6500 ...result! And a ferrari 348 just over 30k...1 year on..now 40k it beats sinking 35k into an Audi or bmw that 18 months down the line would have cost me another 10k depreciation.
Gassing Station | General Gassing | Top of Page | What's New | My Stuff