Depreciation
the biggest cost after fuel purchase
After fuel, depreciation is the biggest factor affecting the cost of motoring and it can vary greatly from model to model. It's not sufficient simply to focus on purchase price as a more expensive car with good 'residuals' may cost you less than a cheaper car the value of which drops like a stone.
Year one By the end of the first year, the average car has lost around 40% of its value. But this varies greatly from car to car. Very popular models such as Mini Coopers may lose as little as 10% of their value.
Year three If you do 10,000 miles a year, the average car will have lost around 60% of its value by the end of its third year.
Our Car Buyer's Guide includes forecast future values for most new car models for a range of different annual mileages. Bear in mind that it's a prediction, not a guarantee but it should help you sort the best from the rest and make an informed decision.
Used Cars
Nearly new Depreciation slows as the car gets older so you may find that a nearly new car (one to two years old) is better value than a brand–new one.
Five–year–old car Buying a five–year–old car may be an even better option. You won't get the latest features, but it won't lose so much in value. And you won't be shelling out so much each month on interest to repay a loan.
But it's only better value if your mileage is low – under 10,000 miles a year. Your repair and maintenance bill will be higher and less predictable the older your car is and these costs will increase as your mileage goes up
Manage your risk
Leasing One way to manage depreciation and the risk of big repair bills is to opt for a personal lease or hire contract – as long as you're okay with not owning the car.
You pay a fixed monthly amount for the car, which generally includes servicing and repairs. It spreads your costs over the year, and it may work out to be the cheapest option, particularly if you cover a lot of miles.
Watch out for mileage limits on the contract though – excess mileage can be very expensive