cars, utes

This will be the first in a series of articles discussing car depreciation, each of which will focus on a particular make and model - in this case, we'll be reviewing the very successful and widely purchased Mazda CX-5.

However, as this is the first we thought it would be a good idea to clear a couple of things up regarding car depreciation before we get into the CX-5 specifically.

What is car depreciation?

Car depreciation is the rate at which your car loses its value over time, measured as a percentage.

For example, say you purchase a new car for $100 (to keep it as simple as possible) and three years later it's worth $60, it would have depreciated by 40%.

Canstar reports that on average, cars depreciate by 19% in their first year and around 15% in years two and three each - though this rate can fluctuate a lot depending on a few factors.

An important thing to note here for those who purchase a vehicle for business use - you may be able to claim the vehicle's depreciation during tax time.

Are there ways to minimise car depreciation rates?

While car depreciation can't be avoided (unless you're buying a classic that is in high demand that is!), there are most definitely steps you can take to help reduce or slow down the depreciation rate.

First (and we talk about this a lot in our articles), make sure you do your research. The manufacturer you choose should have a strong reputation for producing reliable cars which can stand the test of time (e.g. Toyota, Subaru and Mazda) and likewise should be reputable for their customer service. Also, keep in mind the cost of parts and servicing - there are some very well-known brands out there that can charge through the teeth (looking at you European luxury brands).

You also need to make sure you stay on top of your car's maintenance by:

  • Taking it in for regular servicing and have the mechanic update the service books
  • Whenever possible, keeping it parked undercover/in a garage to maintain the paint job and keep hail/leaves/bird poop, etc. at bay
  • Not taking the engine and transmission to their limits (too much - everything in moderation)
  • Sorting out small scrapes, nicks and dings as soon as possible
  • Wash it regularly inside and out (as a bonus, it'll help you notice otherwise missed scrapes, nicks and dings)
  • Whispering sweet nothings to it in the evening before going to bed

How does the Mazda CX-5 measure up with depreciation

Mazda has a lot of clout behind its brand name, and the CX series has certainly done the manufacturer justice. The numerous specification types of the CX-5 have made it a wonderfully versatile offering for Mazda, and its reputation for reliability has ensured it has remained in the market since 2012.

Using a tool from TheMoneyCalculator.com and converting from AUD (using the base model CX-5's current driveaway price of $34,817) to GBP, it was estimated that the depreciation rate over the first year, if driven 10,000 miles, would be 11.94%. In its second year, the rate would be 12.27% and third year would be 12.69%.

Comparing these percentages to Canstar's average rates, you can see the Mazda CX-5 has a good depreciation rate.

Using your car's value to secure a top refinancing deal

If you've opted for a reputable brand and taken good care of your car, its resale value can really help when you're at the end of the loan period and you're keen to upgrade to something new.

Should the residual payment be the same or lower than the value of your car, you could refinance without having to pay any of the residual at all (you might even get some money back!). However, any gaps between the residual and your car's value means you're up for an out-of-pocket payment.

'Huh?' You might be asking.

Here are a couple of examples to help:

  • Your residual payment is $100 at the end of the lease, and your car is worth $100? Great - you're good to refinance and get behind the wheel of your new beast.
  • Your residual payment is $100 at the end of the lease, and your car is worth $80? You'll need to pay the $20 difference.

Talk to us about refinancing a new car

Nearing the end of your current financing and interested in upgrading to a new car? We're here to make the transition as smooth and painless as possible. Call the Stratton Finance team today on 1300 787 288 to discuss your needs or get a free online car loan quote and we'll get you in your new car sooner.

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