What is depreciation?

Depreciation is the loss of value your car suffers over time – usually expressed as the difference in price between when you buy it and when you sell it. Nearly all cars depreciate heavily from new, with most new cars losing between 15-35% of their value in the first year, and usually around 50% in the first three years.

Different cars depreciate at different rates, depending on factors such as brand, fuel type, mileage, condition, number of previous owners, service history, warranty status, size, fuel economy, road tax and compliance with various emissions regulations. You can avoid a lot of depreciation by buying nearly new or used cars as opposed to brand-new ones. Very few cars ever appreciate (go up) in value, unless you're shopping for classic Porsches or Ferraris.