Drivers all over the United Kingdom have been urged to follow 'Three-year rule' in order to be able to save thousands of pounds.
The Three-Year Rule: How Buying a Used Car Can Save Drivers Thousands
Many experts have explained that the three-year rule could help motorists and drivers save thousands when they proceed to buy a used vehicle.
Nischa Shah, an investment banker and renowned accountant, used her YouTube channel to explain that acquiring a new car may not be the best route to take. According to Nischa's figures, a car's “retained value” fell by an average of 25% within two years of acquiring it.
She stated: “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.”
She went on to say: “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.”
Understanding Vehicle Depreciation: Why the Three-Year Rule Makes Financial Sense
RAC data shows 15% of vehicles originally registered shift hands within a year, 25% after a year, only 20% after 3 years, 25% after 4 years and nearly 20% for each year after that until the 13th year when the stir up falls off considerably as cars are thrown to the scrapheap.
The data has also found that 14 years is the average age of a car at scrappage, while the average age of vehicles on the road is nearly eight years.
According to Nischa the implementation of the rule could also assist drivers to sustain less of a loss when they do eventually decide to sell their cars.
After the fifth year, depreciation decreases quite significantly, she explained. In the first two years, motors lose an average of 25 per cent, however, between years three and six they only fall by an average of 15 per cent.