For years people have discussed the depreciation on new cars; we have all heard people say 'it loses value as soon as you drive it off the forecourt'. Now a report from uSwitch states the depreciation kicks in after 88 days.
The scrappage scheme begins on Monday, allowing owners of 10 year old or more cars to trade in old for new and receive £2000.
The research by uSwitch , vehicle depreciation is set to be the "thorn in the side" of the scrappage scheme. The initial £2,000 incentive is wiped out in depreciation in just 88 days of owning the new car.
In total, new vehicles purchased under the Government's car scrappage scheme are set to lose £12.5 billion in depreciation after just one year, it said. Purchasing one of the top 10 most popular new cars costs £16,232 on average and this value plummets by 49% in the first year alone, while the UK's best-selling car - the Ford Focus Style - loses £8,635 or 51% of its value in the first year.
Mark Monteiro, of uSwitch, said: "When choosing a new vehicle, motorists should ensure they research the rate of depreciation of their desired new car, as research highlights how some of the top 10 most-popular vehicles hold their value far better than others. Any motorists tempted to take advantage of the scheme should research the cost of insuring their desired new vehicle as a matter of priority, as the cost could be significantly higher than they are currently paying for their old banger.
"All drivers who are planning to switch their old cars for a newer model need to be prepared for a hike to their premiums of up to 30%."
Author: Carmony.co.uk
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