Year old cars are MUCH cheaper than new cars

The average new car has a list price of around £28,500. But by the time it’s one year old with 10,000 miles on the clock it costs just £21,000 – a reduction of more than 27% in the first 12 months. In the second year the depreciation rate is likely to slow by roughly half (so the second year, this average car would lose around £3,750 in value).

So picking a year-old model will dramatically slash the upfront cost. There are exceptions if you’re picking a plush model. Brands that hold their value best tend to include Mercedes and Porsche – so you won’t see too many year old luxury car bargains out there.

• Petrol cars tend to be cheaper than diesel. Diesel engines are often more economical than their petrol counterparts. But don’t be fooled into thinking this definitely makes diesel a better option. These cars are more expensive, and they usually cost more at the pump than petrol.
• Manual cars are cheaper than automatic. Switching between gears is extra work – particularly to those of us prone to stalling at traffic lights. Yet while automatics take some of the hassle out of driving, they come with a higher price tag.

  A manual Audi A3 diesel hatchback, for example, costs £20,801. This compares to the automatic version, at £22,290 – or a rise of £1,489. Yet many automatics are more fuel-efficient than their manual counterparts, as they ‘know’ the best gear to be in, so you could recoup the extra cost over time.

• Hybrid cars are cheap to run, but cost more to buy. Technology is improving everyday with modern hybrids coming in all shapes and sizes, from superminis to luxury SUVs. Fuel-economy and cheap or even zero tax rates make part-electric models appealing, like the Toyota Prius. They also tend to hold their value for resale