How Car Depreciation Works
A plain-English guide to what your car is really costing you
Depreciation is the difference between what you pay for a car and what it's worth when you sell it. It's an invisible cost — you don't write a check for it — but for most owners it's the single most expensive part of owning a car. Understanding it helps you buy smarter.
The depreciation curve
A new car loses the most value in its first year — often 20% or more — and continues to drop, but more slowly, after that. By year five most cars have lost roughly 40–60% of their original value. The curve is steepest at the start and flattens out as the car ages, which is why a lightly-used car can be such good value.
What drives depreciation
Brand reputation and reliability, supply and demand, mileage, condition, fuel type, and how many were built all matter. Desirable, reliable, lower-supply vehicles hold value; high-supply luxury models with expensive upkeep lose it fastest.
How to lose less to depreciation
Buy a model with a track record of strong resale value. Consider buying a two-to-three-year-old used car and letting the first owner absorb the steepest drop. Keep mileage reasonable, maintain the car, and keep records — all of it protects resale value.
Check any car's value
Look up resale value and depreciation for any make, model, or VIN.
Estimates are for informational purposes only and are not a guarantee of value.