What is depreciation?
Car depreciation is the difference between the price you originally paid for the car and the price you would be able to sell it for today. For most drivers it is the single biggest cost of car ownership – bigger than fuel, insurance or servicing – yet it is easy to overlook because the money disappears silently rather than leaving your bank account each month.
Depreciation is steepest at the start of a car’s life: a brand-new car loses value the moment it is registered, and the loss is typically heaviest over the first three years before the curve flattens out. That is why nearly-new and three-year-old ex-lease cars are often considered the sweet spot for value.
What affects how fast a car depreciates
Bear in mind that some makes and models are affected by depreciation more quickly than others. Key factors include:
- Desirability and brand – models in strong demand hold value; unloved ones do not
- Mileage and condition – higher mileage and visible wear accelerate the fall
- Service history – a full, documented history supports resale value
- Running costs – vehicle tax bands, fuel economy and insurance groups all influence what the next buyer will pay
- Market shifts – changing rules and demand, for example around diesel and electric cars, can move used values noticeably
How to lose less money
Buy a car that has already taken its biggest depreciation hit, keep mileage sensible, service it on schedule and keep the paperwork, and avoid unusual colours or modifications that narrow its appeal. Checking a car’s history also protects value – hidden problems such as write-off markers hurt resale badly.
For more help choosing a car that holds its value, read our buying guides.