The fact that cars depreciate at a – sometimes frighteningly rapid – pace is an issue that anyone purchasing a new vehicle is likely to be concerned with. However, while depreciation is undeniably an issue, is it as much of an issue as car buyers have been led to believe?
All cars depreciate
While some cars depreciate at a faster pace than others, all cars will depreciate. While there’s a chance that the model you choose may one day be considered a classic and thus see its value rocket, the chances of this occurring are slim enough to be considered irrelevant; whether you buy a BMW, a Toyota, and a Tesla, depreciation will occur.
However, it’s worth noting that depreciation is only a factor if you see a car as an investment.
Should cars be considered an investment?
In a word, no.
Think back to when you bought your latest TV. You probably thought about the purchase price, the specifications, the functionality, and so on – but did you think about depreciation? Almost certainly not, despite the fact that any TV you chose would absolutely depreciate the moment you purchased it.
The reason depreciation isn’t a factor in most purchases is because we don’t see these purchases as investments; we see them as things we will use. Cars fall into this category also; they’re not an investment, but a functional item that we intend to make use of on a daily basis.
Does the high value of cars make depreciation more of an issue?
Having read the above, you may be thinking that depreciation should still be a major issue for those buying a car due to the high costs involved. However, there are high costs involved in a huge number of ‘useful’ purchases; a new bathroom suite, for example, will cost thousands, but its value will depreciate rapidly. What’s more, people will continue to invest in that bathroom suite over the coming years – new accessories, new decor, and so on and so forth – despite the fact that they know the overall value of their bathroom will only decrease. The depreciation, and extra expense, simply doesn’t matter, because a bathroom suite being functional, working well, and being pleasant to use is more important.
The same applies to vehicles. If you buy a Toyota or a BMW, then yes, it will lose value, and yes you may need to invest further in repairs for your Toyota or BMW accessories – but that’s okay, because you’ve bought a car that you can use. The money you spend on both purchase prices and further expenditure are worth it, because you’re investing in a quality item that you will use day in and day out – not a static investment.
Depreciation is a factor when buying a vehicle, but it is not quite as important or catastrophic as many people have been led to believe. Instead, focusing on finding a car that suits your functional needs and your budget as your first priorities; depreciation should, at best, only ever be used as a tiebreaker if there are two suitable vehicles that you cannot otherwise separate.