Motorists looking for a second-hand petrol, diesel, or electric car should adopt a simple technique to get the best deal this summer, according to experts. Sean Wright, vehicle specialist at broken-car buyer Sell Your Problem Car, stressed that road users can avoid falling foul of steep depreciation by researching before finalising a deal.
Understanding Car Depreciation
Car depreciation is the loss of value over time, with age, mileage, and condition often key factors in why prices drop. New cars drop in value immediately after purchase, and models lose a lot of their total worth in the first few years on the road.
Experts admit that those buying newer second-hand cars need to take precautions, and looking into depreciation is one of the most important things many road users tend to miss.
The 1-3-5 Rule Explained
Sean explained the theory behind the 1-3-5 rule. He said: “Start by searching for one-year-old, three-year-old and five-year-old versions of the same make, model and trim. Compare several adverts at each age and keep the mileage, condition, engine, gearbox and equipment as close as possible.
“If the price falls sharply between years one and three, but changes far less between years three and five, that suggests the steepest depreciation has already happened.”
Depreciation Rates and Timing
Sean explained that a new car may lose between 15% and 35% of its total value after its first year. It's not uncommon to see vehicles lose between 40% and 60% of their original price over the first three years on the road.
Sean added: “The largest price gap between years one, three and five shows when the car is losing value fastest. Most cars experience their steepest fall during the first three years, with the first year often bringing the largest drop. However, depreciation does slow down later in a vehicle’s lifespan, with models over six years old only likely to drop by between 5% and 8% per year.
Second-hand car sellers can be clever with their adverts, timing a sale to end just before the total value is likely to radically fall. It’s crucial road users don’t fall into this trap when agreeing to a deal.
Advice for Buyers
Sean added: “Buyers often focus on the amount they pay at the dealership, but the amount lost when the car is later sold can have a much larger effect on the overall cost. A few minutes spent checking the same vehicle at different ages could help buyers avoid purchasing just before another sharp fall in value.”
