Depreciation is one of the biggest talking points when buying or selling a car. It represents a significant chunk of money that someone is likely to lose when selling a previously brand-new car to a third party. Why is depreciation such a big issue, and what can be done about it when you're looking for a replacement set of wheels?

Accounting for the Cost

When a car manufacturer designs and builds a particular model, a tremendous amount of research must go into the process. This research and development is in addition to the raw manufacturing costs and is often referred to as a "soft" expenditure instead. Vehicle manufacturers also maintain dealer networks in order to bring the vehicle from the factory to the consumer. These facilities are costly to set up and maintain and represent an element of cost within the overall price.

When you take into account research and development, dealer networks and additional marketing expenditure, you can account for quite a lot of the "sticker" cost of a new vehicle. This part of the price is not represented by anything tangible per se, and it's difficult to pass on from one owner to the next.

Dealing with Depreciation

Due to this lost cost, new vehicles depreciate far more rapidly than used ones. The first owner has to absorb the loss, which is most dramatic during the first few years. Unfortunately, it's almost impossible to avoid this scenario due to necessary R&D, distribution and marketing costs. But it is still possible to take advantage of new vehicle technology by buying shrewdly on the used car market.

Getting the Best of Both Worlds

Certainly, new vehicles are attractive because they feature that up-to-date technology, the latest driver aids and other attractions. But those particular features will still be in place should you buy that vehicle when it is still relatively new but on the used car forecourt instead. The outgoing owner will have looked after the vehicle so they can get a reasonable price at resale and will also have absorbed much of the depreciated loss.

Making a Shrewd Decision

So, if you want to avoid much of the pain associated with depreciation but still get many new car benefits, get in touch with a used car dealer instead. They will help you search for an appropriate make and model, and you'll be able to use your cash more shrewdly. 

For more information about used cars, contact a local company.