As a very rough guide, cars generally depreciate by 50% over 3 years.
Whether this depreciation is a reduction on the amount you paid initially for the car outright(preferable) or through the monthly charge for leasing or PCP, it is still an amount that has to be paid.
New small family car – £18,000
After 3 years – £9,000
After 6 years – £4,500
As the car gets older the cash value that is lost in depreciation reduces, as the amount paid initially is a smaller amount.
However, the more you pay for a car the higher this cost is:
– A supposed family SUV – £60,000 new, loses around £30,000 over the first three years! (More than an average annual wage for the UK.)
– Whilst an electric SUV at £100,000 new, would lose £50,000 over three years – such a high amount that even the lower cost of ‘fuel’ would have a limited effect on the losses.
When considering cars it is important to look at expected time of ownership and initial cost to work out your true costs.
Changing cars every few years will cost you dearly, due to the higher amount that the 50% loss is calculated from.