Car Depreciation: How Much Value Will a Car Lose?

Vehicles lose value every minute starting from the time they leave the dealers lot. This is the fact that depreciation affects the resale value of the vehicle. The rate of depreciation is different for every vehicle. It is true in the case of cars too. Not all cars depreciate at the same rate.

Depreciation of new car

You are top of the world when buying a new car. But unfortunately, the fact is that the fastest depreciation occurs in new cars. Most of the new cars lose nearly 10% of their value after they are driven a lot. At the end of the year, they again depreciate by 10% to 20%. As the year’s pass, it will depreciate about 15-25% every year. By the fifth year, the average loss tends to be 60%. So if you plan to trade in or sell your vehicle within five years of its purchase, you will lose an amount of the car’s value to depreciation.

Depreciation of leased car

People who want to use the latest expensive cars they choose to lease. The lease cost includes depreciation cost, additional interest, and tax. This sets the buyout price for the residual value of the vehicle. As the lease ends, you don’t have to worry about the selling.

Depreciation of used car

As depreciation is drastic in the first year of its purchase, you can save 20-30% if you buy used cars. After the initial year depreciation stables and remains 17.5%. So save more by buying a used vehicle. Moreover when you want to sell it or trade in it will retain more.

Rate of Depreciation of Different Cars

Every car depreciates at a different rate. The various factors involved in the rate of depreciation are Age, Mileage, brand, Paint color, Accident history, Configuration and features, Supply and demand, Running cost, newer model, taxes, and Warranty.


Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.