Page 90 - Benjamin Franklin\'s The Way to Wealth: A 52 brilliant ideas interpretation - PDFDrive.com

when buying personal or company transport. Partly that’s because it’s not an
exact science, with different models depreciating less based not just on their
perceived build quality but also on their popularity—a factor which varies.
It may come as a surprise to find that a typical new car will lose 40% of
its value in the first year just because it is no longer new, but if it is a
model in particular demand that figure can be reduced to as little as 10%.

The first year is the biggest bite out of the value of the car just because it
no longer boasts that ‘fresh from the showroom’ appeal but by the end of
year three a typical car will have lost 60% of its value. Compare that with
the cost of capital if you are buying on a credit scheme and you can see
that the initial purchase price is really only the tip of the iceberg. Which is
why the most cost-effective car is probably a five-year-old model with a
low mileage…

HERE’S AN IDEA FOR YOU…
Most of us use cars for work or personal reasons but do you need to
own those wheels? Leasing provides a means of managing depreciation
and helps plan ahead by setting a fixed monthly cost (usually including
servicing). If you’re doing major mileage it can also prove the cheapest
option.