Vehicles in the UK are depreciating at a faster rate than before this year.
posted on Dec 13 2008 by Sam Jones
Would you knowingly throw money away especially in these economic hard times? No of course you wouldn't which is why car leasing is the solution to buying a new car. What is depreciation and what does it really mean to you? Depreciation is the term used to describe the decrease in monetary value of your car over a period of time.
Depreciation is the largest hidden cost to you and your vehicle. Whilst you may enter into what seems like a good deal at the time, you must consider what the value the car will be when you chose to sell it on. This is called the residual value of a car. The moment you drive your car off the forecourt of your dealer, depreciation has started. More frustratingly to the consumer, you pay to keep you car road worthy and you pay for tax, fuel costs etc but all the while your car depreciates.
How is depreciation worked out for your brand new car?
Year 1 euro By the end of the first year the average car has lost about 40% of its initial value.
Year 3 euro Depreciation is worked out on a 10,000miles a year user average. Therefore, on this basis, a car on average would have lost about 60% of its initial value after 3 years. Leasing your car will eliminate your depreciation problem completely. It would be silly to think that the depreciation dissapears with car leasing because it doesn't, it is part of the calculation to reach your monthly repayments for the time you have your car. A huge advantage is no more apparent than right now as the value of cars plumit because of the credit crunch, as the driver of a lease car you are completely protected from financial loss, now doesn't that make you feel good.
The British public have been proud car owners since the creation of the motor car but it really is time to take a good hard look at what we are doing. Do we really invest our hard earnt cash into something that loses value Invest in something that appreciates, lease the things that depreciate. For more information about car leasing read our guide or speak to one of the team on 01273 789 900.