Car Depreciation Calculator
A new car loses ~20% the moment you drive it off the lot. Then ~10% every year after.
The 10% Rule of Car Depreciation
After the steep first-year drop (~20%), most cars depreciate roughly 10% per year. This means a 3-year-old car has already lost ~35% of its value, making it the "sweet spot" for buyers who want reliability without paying for someone else's depreciation.
Depreciation by Vehicle Type
| Type | Year 1 | 5-Year Total | Notes |
|---|---|---|---|
| Luxury sedan | −25% | −60% | Fastest depreciation |
| Economy car | −20% | −50% | Average depreciation |
| Truck/SUV | −15% | −40% | Holds value well |
| Electric (non-Tesla) | −25% | −55% | Battery anxiety hurts resale |
| Tesla Model 3/Y | −15% | −35% | Better than average EV |
| Toyota/Honda | −15% | −38% | Reliability premium |
New vs. 3-Year-Old: The Math
Buying a $35,000 car new costs you ~$16,700 in depreciation over 5 years. Buying the same car at 3 years old for ~$22,750 costs you ~$7,800 in depreciation over the next 5 years. You save ~$8,900 and the car still has years of life left.
This is why personal finance experts consistently recommend buying 2-3 year old certified pre-owned vehicles — you let someone else pay the steepest depreciation curve.
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