Top 5 vehicles that hold their value

When choosing a new car, most buyers focus on price, fuel economy, safety and features. However, there's another consideration that can have a significant financial impact over time – depreciation.

Depreciation is the reduction in a vehicle's value as it gets older. Every car depreciates, although some hold their value much better than others.

A range of factors can affect depreciation, including the vehicle's reliability, brand reputation, popularity, maintenance costs, supply and demand, and how quickly new models are released. This matters because a vehicle that retains its value may leave you in a stronger financial position when it's time to sell or trade in.

Why depreciation affects your loan

Depreciation is also relevant when financing a vehicle.

Cars generally lose value faster in their first few years than they do later in life. If your loan balance is reducing more slowly than the vehicle's value, you may owe more than the car is worth for a period of time.

Choosing a model with stronger resale value can help reduce that risk. Making a larger deposit or selecting a shorter loan term can also help you build equity in the vehicle more quickly.

Which cars hold their value?

According to RedBook data for June, the five models expected to retain the highest percentage of their value are:

• Suzuki Jimny.
• Toyota LandCruiser Prado.
• Toyota RAV4.
• Toyota Yaris Cross.
• Land Rover Defender.

The right vehicle for you will also depend on your budget, driving needs and long-term plans.

A broker can help by comparing finance options, explaining how different loan structures may affect your repayments and helping you choose a loan that suits your circumstances.

Whether you're buying a brand-new vehicle or a used one, thinking about depreciation before you sign the contract can help you make a more informed financial decision.

Thinking about your next vehicle? Get in touch to compare car loan options and discuss a finance solution that suits your circumstances.