Used Vehicles : Bring Down Depreciation Losses - Auction Export

Used cars bring down your depreciation losses - true or false?

Buying an old car definitely has a number of benefits. People all over the world are putting in a lot of demand for these vehicles because of the simple fact that used cars can be bought at a fractional cost. So, young professionals, middle-class businessmen and college-going students place a heavy demand for these 2nd hand vehicles. It is also said that apart from offering other benefits, used vehicles also bring down your depreciation-related losses. Now, how far is this statement true?

Depreciation is certainly a loss but it takes place in a hidden way. It is an expense which does not require any expenditure, year by year. Rather, it is the loss of value which your car suffers every year. When you buy a new car, then it depreciates faster. It is because it experiences a large drop in its market price after 6 months or after 12 months. Therefore, if you have bought an old car which is already more than a year old, then you save yourself from such a big depreciation taking place in the first year. The first 3 years lead to the highest fall in value for any car, irrespective of its model or category. So, the initial financial setback is greater for a new car.

On the other hand, used cars depreciate but at slower rate. So, the loss taking place every year is lower. Therefore, the buyer does not feel any substantial pinch in his pocket. Given the fact, they purchasers pay a nominal sum for investing in used vehicles, so the depreciation hardly affects them. They just look to recover their investment by enjoying the car for the next few years.

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