Drivers are being urged to follow a simple five-year rule when buying a car, after experts warned that vehicles typically lose 50-60% of their value within the first three years of ownership. The advice comes from Sean Wright, vehicle specialist at broken-car buyer Sell Your Problem Car, who suggests comparing the same model at different ages to identify the steepest depreciation period.
How depreciation hits new cars
According to the warning, from the moment a driver takes a new vehicle off the forecourt, its resale value begins a steady decline that continues for several years. Although the rate of loss slows over time, the value of a car tends to keep depreciating for up to eight years before it eventually levels out.
The expert advice is to search for one-year-old, three-year-old and five-year-old versions of the same make, model and trim. By comparing several adverts at each age, keeping mileage, condition, engine, gearbox and equipment as close as possible, buyers can see where the biggest price drops occur.
Why the five-year rule matters
Sean Wright explained: “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.” He 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.”
The financial impact is significant. A car bought for £10,000 that depreciates 50-60% over three years would lose around £5,000-£6,000. However, a £40,000-£50,000 vehicle could see the owner losing closer to £25,000 when it comes to revaluing the car.
Buying and maintenance tips
Sean Wright also warned that 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. He said: “A few minutes spent checking the same vehicle at different ages could help buyers avoid purchasing just before another sharp fall in value.”
In addition to purchasing considerations, maintaining a vehicle correctly can help it hold its value better, according to the expert. Proper care, regular servicing and keeping records can slow the rate of depreciation and protect the car's resale price.
