Sainsbury's Bank tackle depreciation in the value of cars
£12 Billion wiped off the value of new cars within 12 months
Sainsbury's Bank tackle depreciation in the value of cars
Some 2.4 million brand new cars will be purchased this year and according to Sainsbury's Bank, around £12 billion will be wiped off their value after 12 months. This equates to around £5,000 per vehicle.
Depreciation is one of the biggest costs associated with owning a new car. On average, new cars lose as much as 10% off their value the moment they leave the showroom and around 40% after the first year. Within three years, they lose around 60% off their value.
Sainsbury's Bank's car purchase scheme, Drive, offers a very effective way in which to tackle depreciation. The scheme's monthly payments are not calculated on the total cost of the car, but instead only on its depreciation plus the interest. Monthly payments are fixed at the outset on the guaranteed future value of the vehicle and the bank takes the risks of any further depreciation.
Val Wood, Drive Product Manager, Sainsbury's Bank said "Depreciation in the value of a car is something that many motorists just accept, but there are ways in which they can reduce its impact. Drive not only takes into account the future value of a vehicle in terms of lower monthly repayments, it also enables many people to purchase cars they might not be able to normally afford in a flexible and easy way."
Drive is able to offer some of the most competitive prices available for brand new cars because of discounts Sainsbury's Bank has been able to negotiate from manufacturers. The scheme allows customers to part exchange an existing car and choose a contract with any level of deposit (even zero). At the end of the agreement they can choose either to make a final payment and keep the vehicle, pick another car or simply return it owing nothing. Drive offers a typical APR of just 8.9%.
Together, What Car? and Sainsbury's Bank, use a team of mystery shoppers to create Target Price, an achievable discount for every make and model on sale. However, Drive guarantees to out perform Target Price every time, offering motorists even bigger discounts with no need to haggle. It also consistently beats the ‘on the road price' quoted by manufacturers, in some cases by as much as £3,500.
If you do plan to purchase from a car dealer, Sainsbury's Bank offers the following advice:
- Choose a model that holds its value well.
- Avoid wild, trendy colours because they can date quickly and reduce a car's appeal.
Date published: 12/7/2004 10:23:30 AM
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