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What is deprecation and can it affect my gap insurance?

 

Deprecation is according to the Online Oxford English Dictionary " the action of not approving of something or saying that you do not approve of something"

(definition taken 7th September 2021) 

 

When it comes to cars it means something completely different.

 

The BBC say " Depreciation refers to when the value of something goes down over time. The value of a car is usually decreases in value with time. Therefore, its value is said to depreciate. Data taken from BBC Bitesize Website Article titled Working with appreciation and depreciation 07/09/2021 

 

Instead, depreciation means the amount that your car will lose over time. Depreciation is a fact of life that we already completely accept. After all no-one would want to pay the Recommend Retail Price (RRP ) new car price for a vehicle that is four years old. So, unless you have an exceptionally rare or classic car we all accept that it will not be worth the same amount in two, year or four years’ time. 

 

This is normally not a problem if you still have the car to use and enjoy. 

 

It can however be a major issue if your car is written off. This is because without any form of gap insurance and without having to use any savings you may have will could be left with whatever your own insurance company offer you in settlement to replace the car and or clear any finance. 

 

So just how much of a concern is depreciation?

 

According to What Car deprecation can be as much as 66.2% *

 

They recently listed what they consider to be the fastest deprecating cars and it makes for some surprising reading.