‘Three year rule’ could save you thousands when buying a used car… and mean you lose less when you sell it
AN ACCOUNTANT has shared a “three-year rule” that could save you thousands when buying a used car – and mean you lose less when you sell it.
While getting a shiny new motor is always nice, this could actually be the “less financially savvy decision” according to the experts.
Nischa Shah, an investment banker and qualified accountant, took to her YouTube channel to advise Brits on how to get the best value out of a second-hand purchase.
It all comes down to how quickly cars lose value after they are driven off the dealership’s forecourt.
New cars are the most expensive option but also depreciate the most within a shorter period.
According to Nischa’s data, a car’s “retained value” drops by an average of 25% within two years of buying it.
Given that, according to the RAC, the average length of car ownership in the UK is around 4 years, this could leave Brits losing out in a big way.
Drivers of newer vehicles are at risk of seeing thousands wiped off the value by the time they come to sell.
Instead, Nischa revealed the exact times to buy and sell to get the most out of your motor.
She said: “Buying a used car can save you a lot of money in the long run.
“The sweet spot is usually between three and five years old.
“At that point, the car has usually depreciated substantially at the expense of someone else.”
The finance whizz added that this could also help drivers to sustain less of a loss when they do eventually go on to sell the car as, after year five, depreciation slows down quite significantly.
While in the first two year, motors lose an average of 25%, the data show that between years three and six they only drop by about 15%.
However, you still need to be careful about which car you buy as a clapped-out banger could still cost you more over time.
Nischa added: “The downside is that a used car may require more maintenance.
“It can come with wear and tear from previous owners.
“This can really add up over time.”
It comes after a mechanic revealed how you can save hundreds and make your air con “twice as cold” this summer.
Meanwhile, a car expert shared his four-step guide to buying a second-hand car in the UK and has shown how you can save hundreds of pounds.
YouTube influencer Grant known online as ‘Scottish Car Clan’ gave his guide for buying a used motor in the UK to his 44,000 followers on the site.
Another motorhead revealed the three things every driver should tick off before buying a used car.
The trio of checks comes with charity Citizens Advice warning it dealt with a mammoth 43,000 used-car complaints in 2023.