Forget About New Car Depreciation With RTI and VRI Gap Insurance
GAP Insurance Protects New Car Buyers Against Car Depreciation
Car depreciation affects all new car buyers and as a potential
insurance customer we would like to discuss the effects
of depreciation with you. There are many theories and ideas
out there about what exactly it is that causes new cars
to depreciate. Well the truth is that both new and used
cars depreciate in value and people buying (New or Used)
would do well to considering the facts. Also considering a new car warranty!
Car depreciation is the loss of value in financial terms of a motor vehicle between the time it is purchased either new or used and today's value. With new cars the drop is considerably higher over a shorter period of time, however used cars are also losing value every day. Let’s start by taking a look at new cars. These are the cars you will find displayed on the New Car Dealerships Floor and even before you have bought it the vehicle has started to loose its value. Every day that the vehicle sits there it is becoming an older model and the day that it will be replaced by tomorrow's newer more technologically advanced model draws ever nearer. At the same time that dealership is paying what is known in the industry as a stocking loan against that vehicle on a monthly basis.
And so the profit he will make from the sale of the vehicle is therefore decreasing by that same amount. The dealer must sell that motor vehicle as soon as they can and you as the buyer will then take over the depreciation costs. And so the chain has begun.
The day you put your first few miles on your new car the real big loss of value
or "car depreciation" starts. The first few months
are where depreciation is relatively low, but after you
get to the six months mark it is more likely that the vehicle
model you purchased has already been replaced with a newer
model. At this point the desirability of your car drops steeply
and along with that loss, wear and tear etc, the cars depreciated
value has accelerated! Top end luxury cars expect to lose
one third of their value to depreciation. The true value
of your car is the price you can actually sell it for.
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New Car Depreciation - A closer look
Most new car buyers incorrectly assume that all new cars and used cars depreciate at the same level.
The more luxurious a car is on the day it is sold at a new car dealership, the more likely it is to incur accelerated levels of depreciation once it leaves the showroom. A prime example of this would be the Bentley Arnage or Continental GT. The more expensive a car is at the time of purchase from new the higher the chances are that severe depreciation will take place against that car during the first 3 years! Cars like Porsche and Mercedes Benz SLK are again great examples of this. Among the many market factors which cause cars such as these to depreciate so quickly, are the very high running costs they carry. Just think about how much a set of four tyres for a Bentley Continental will cost you. The Bentley Continental GT is quite possibly one of the most desirable cars that you can buy in the world today, even Paris Hilton believes it's cool to be seen in one! The Bentley Continental is designed to provide its owner with both excessive luxury with levels of performance only a select few will ever experience. As such the tyres for this car have been specially designed to provide not only excellent comfort and stability but also high levels of grip. Tyre sizes are 275/40 19" and lets be real, most Bentley owners will be sporting 22" rims! The 19" rim tyres come in at an amazing £250 per tyre or £1000 for four tyres. Do that once or twice per year and your spending a lot of your hard earned money on rubber. The service cost is astronomical and the cost of replacing the brake pads alone runs in the hundreds of pounds. After just one year or around 10 000 miles you could buy a Bentley Continental for around £90 000 and a 2 or 3 year old one for £70 000. That’s a loss in value of £50 000 in just 3 years!
For new car buyers thinking your not affected as your car is either a £30,000
prestige model or 4x4 think again. We take a look at the
BMW X5 4x4 xDrive30d SE 5dr.
This 4wd is a firm British favourite as its price makes
it one of the most affordable luxury 4x4's on the market.
Its size, electronics packages and safety features and massive
boot space are a big hit with business men and families!
New Car List price £40,800
Car Value after 12 months £23 000
Car Value after 24 months £20 000
Car Value after 36 months £17 500
Car Value after 46 months £13 500
The Mercedes-Benz C-Class Saloon C200
CDI Elegance 4dr has a list price of only £25,168
This car is a firm favourite amongst luxury new car buyers
as it is not only an elegant vehicle with the Mercedes Marque,
but also returns excellent fuel economy and low CO2 emissions
which keeps company car tax bills affordable. With fairly
low running costs on most C-Class models, a one year old
example will have the reassurance of excellent residual
New Car List price £25,000
Car Value after 12 months £14,000
Car Value after 24 months £12,000
Car Value after 36 months £10,500
Car Value after 46 months £8,500
Prices and values are based on WhatCar? Figures from their depreciation calculator
WHAT ARE THE BENEFITS OF GAP INSURANCE?
For a premium starting at just £55, you can be safe in the knowledge that should your vehicle be a Total Loss (stolen or written-off,) you won't lose a penny.
You may have a 'new for old' Motor Insurance which will replace your vehicle
with a new one in it's first year of registration. But unfortunately,
should your vehicle be stolen or written-off a day after
the 'new-for-old' policy expires, the insurance company
will give you the depreciated value. GAP
insurance will make the difference up to the original
Our Gap Insurance is available
for a term of up to 4 years, covers both new and used cars,
whether purchased privately or from a dealer, bought using
finance, cash or on contract hire. Cars can be up to SEVEN
years old when the policy is purchased. We provide clear
information on all types of Gap Insurance.
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