Car depreciation and residuals explained
How often have you heard it said that something is worth only what somebody is prepared to pay for it? It’s an undeniable fact and it’s true of anything whether it’s a painting, a piece of jewellery or a car. What underpins the value of something is the balance of supply and demand; if there’s lots of demand but not much supply, values will be high. But if you reverse the situation and there’s an oversupply, values will be low. This is how the car market works, but there’s an added complication because sometimes there’s strong demand and ample supply too. When you buy something new it loses value as soon as you take possession. It has to be worth less than what you paid for it, because it’s used. After all, why would someone pay the same for a used item as a new one? In the world of cars there are a few examples that buck the trend, but they’re few and far between.