Car Depreciation

What is depreciation and how is it calculated?

Published: 01-09-2019

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Classic Red Porsche Car

What is depreciation?

Nearly all cars are depreciating assets; the moment you take a car off the showroom floor, it is losing value. Sometimes it's easier not to think about depreciation but here at Brego, we believe that you should factor residual value from day one. It has the potential to ruin your entire experience of owning a car and with the right tools, you can ensure that doesn't happen.

Depreciation is a factor of life in the automotive world, a used car is inherently worth less than a new car unless we're talking about classic or rare cars (think the P1, Senna, DB5, 250 GTO and anything made by Bugatti or Koenigsegg). These are rare cars and make up less than 1% but if you're lucky enough to get your hands on one and keep it in great condition - no depreciation for you!

How to avoid depreciation?

No one wants to lose money while they sleep and with the right data, we can ensure that the cars we buy don't lose as much value by buying smartly.

First, a new car will nearly always depreciate faster than a used car. So.. buy used. Some folks are fans of buying new cars to customise their options, paint and details - if you're not too fused about this though then the second hand market is where the smart buyer will be to avoid depreciation.

Next, depreciation varies from brand to brand. Jaguar's will depreciate much faster than BMWs - for some reason, brand influences residual value.. think historical reliability and pedigree. But this doesn't mean you have to trade your "get out of jail free F-Type" for a "golf-on-a-sunday" BMW. As Jaguar's (in our example) depreciate faster, a 2015 F-Type is now relatively inexpensive and has done the majority of its' depreciation. On the upper luxury end of the market, Ferrari's will depreciate slower than McLarens - so if you buy a McLaren, make sure it's a few years old and well looked after - but if you buy a Ferrari, just make sure it's well looked after!

What is Brego?

We created an advanced artificial intelligence algorithm to predict 5 years of depreciation data, so that you can get to the part of safely buying a car, and we deal with helping you finance it. We sell our products to finance companies and dealerships, but if you're interested in finding out about a certain car then get in touch, we'd love to hear from you and we'd be happy to help you out!


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