Buying a car to let; if it makes 11% p.a but depreciation is 30%, isn't that a loss?

New cars depreciate at 20-30% in the first year. Has this been entered into the equation?

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  • Anonymous
    7 years ago
    Favourite answer

    Work it out - assume the car costs £10,000, you make 11% of that per year, and depreciation is 30%

    After 1 year - car value - £7,000, income £1,100, total £8,100

    After 2 years - car value - £4,900, income £2,200, total £7,100

    After 3 years - car value - £3,430, income £3,300, total £6,730

    After 4 years - car value - £2,401, income £4,400, total £6,801

    After 5 years - car value - £1,681, income £5,500, total £7,181

    I really can see any way you are going to make a profit out of that.

  • wg0z
    Lv 7
    7 years ago

    if 11% is supposed to be the overall return, then depreciation is supopsedly already counted.

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