Prices are driven down by two main factors. Credit: Pixabay

Motoring with Paul Jolly: Financial benefits to be had with second hand cars

North Devon Gazette

With the continued shortage of new cars in the showrooms, many buyers should consider the second hand market as an alternative.

This is not such a bad thing as there are financial benefits to be had.

New cars always depreciate faster than used ones.

The depreciation ‘curve’ gets less steep the older a car gets.

Additionally, depreciation comes from your tax paid income.

This is a subject many dealers will avoid talking about when you are about to sign up for that shiny new car.

There are clever finance arrangements with assisted deposits, manufacturer discounts and zero percentage rates plus the option to renew or buy the car at the end of the contract.

In reality, all you are doing is paying your depreciation monthly.

Your car may have no equity left in it at the end of the term and your deposit has gone as well.

These are easy ways to own a new car and may include free servicing as well but the fact remains that depreciation is always the biggest cost to ownership.

Generally speaking, the three- and five-year thresholds are when cars become reasonable value to the consumer.

Company cars are traded in at these cut-off points and always go to car auctions as policy by the dealerships.

This is what drives down the value of used cars.

There are thousands of decent, smart and properly maintained cars at auctions every week and this is where the used car industry gets their stock in trade.

Prices are driven down by two main factors: A: Supply and demand.  B: The internet.

In the case of the latter, this has had a tremendous effect in recent years.

The Autotrader website alone has over 400,000 cars nationally at any one time to choose from.

Here are two surprising facts. It is perfectly possible to buy a car for 25 per cent of its cost new but which has 75 per cent of its life left.

And it is also perfectly possible to buy a car for ten per cent of its cost new but which has 50 per cent of its life left.

Paul Jolly, classic car specialist and valuer
Paul Jolly, classic car specialist and valuer
Lifestyle