Used Car Depreciation

How much is your used car worth and why does it matter?

Used car depreciation is not something that any one can ignore.

From the moment that you have handed over your savings or signed on the dotted line your car is loosing money.

This loss of money and the rate at which it happens is called deprecation and it is worth while considering this before you buy.

The average car new or used can lose up to 50 % within just three years and that could equate to thousands of pounds. In fact the rate of depreciation on a new car can be even higher.

This is not because a new car depreciates so much quicker than a used car.

Instead this is because when you compare rates of new car depreciation in comparison to used cars you will need to factor in that nearly 20% will not of been paid for your car instead it will have gone straight to HMRC in the form of vat.

So how can variances in rates of used car depreciation affect you?

Lets look at the facts. If you buy a used car today and pay for example £10,000 depending upon the model this means that it could be worth as little as under £5,000 in just three years time.

Normally this is not an issue as you would decide when and if you part exchange your car and subsequently how much you accept tin part exchange however what happens if that choice is taken away from you. What happens if you used car is involved in an accident or stolen and written off.

Please remember that your own fully comprehensive motor insurance company will only ever be legally obliged to offer you the value of your car on the day it was written off. With rates of deprecation on used cars this means that the amount that you are offered could be thousands if not tens of thousands of pounds less than you originally paid.

Gap insurance can help you protect yourself against the effects of used car depreciation however is it still important to understand all the implications.

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