Why do New Car Values Depreciate So Quickly?
New cars will depreciate in value for many reasons, usually revolving around wear and tear on the vehicle. When someone buys a new car, they feel confident in the engine and the amount of abuse the car can take because it has never really been driven before. When people make this mistake and do not take care of their new car, the value of the car will depreciate because the quality of the engine is being compromised by neglect. You might forget oil changes, or not take it in for a tune up as often as you did with older cars. The more frequently you take care of your car, the easier it will be to maintain the value of your car. However, wear and tear is not the only reason that new cars depreciate in value so quickly.
Becoming Obsolete
While a new car is not like the latest mp3 player or mobile phone, they do become obsolete over time. Some can become obsolete over a short period of time from when they are first put out on the lot. This is usually because the manufacturer is already in the process of designing the next year's model before they even release this year's model. By the time your 2011 car is purchased, the 2012 model is already being advertised, which means that your car will not have the features or appeal that it briefly had. This is very much like a mobile phone, whereas you buy the latest model, and watch in horror as a newer model comes out the next week. The same goes for new car purchases, but this does not have to discourage you from buying a car. All things will continue to progress, new models will come out, and that is a simple fact of economy and business.
Frequency of Use
New cars appear to be flawless when we first climb into them to test drive them. They have strong engines, electrical features, and an overall great feel to them. When you buy a new car, you want to drive it everywhere. Going for a weekend at mum's with the kids? So what if it will be a 7 hour drive? You could take a plane, but why do that when you have a perfectly good new car to use? Back and forth to mum's house seems like a long trip, but it's nothing your new car can't handle. However, if you do not properly maintain your car, you could find that the value of it depreciates far faster than you anticipated. You just need to be sure that you take proper care of your car if you plan to use it for long trips.
Most people will buy a new car knowing that it will be subject to vehicle value depreciation because of wear and tear, and because newer models will immediately come out afterwards. Some car brands keep their value better than others, but these are usually very expensive cars and can take years to pay for. After you finally pay the car off, it might still be worth something decent, but if you paid 20,000 pounds for a car and finally paid it off after 5 years, you will find that your 20,000 pound car is worth little more than half of what you paid for it. This can be discouraging for some people, but what everyone needs to remember is that if they buy a new car, they are paying for the luxury of having a top notch vehicle that they get to enjoy the best years of the car's life in.