What Determines a Car’s Depreciation Rate?

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - October 12, 2018

As soon as a new car is purchased and driven off the dealer’s lot, it begins to depreciate. It’s not something that most car buyers think of right away, but the depreciation rate is important in the long run. How much a car depreciates depends on the vehicle, as well as other factors.

Five Depreciation Factors

These are five of the biggest factors that determine a car’s depreciation rate:

  • Mileage – The biggest factor that most people think of when determining depreciation is mileage. The average mileage for a vehicle is anywhere from 10,000 to 15,000 a year. The more miles driven, the greater the vehicle’s depreciation rate typically is when it’s time to trade it in.
  • Reliability – If the car’s reputation for reliability hasn’t been stellar, this can affect its depreciation rate. Consumer Reports notes that vehicles such as the Fiat 500, Ford Focus, and GMC Acadia are some of the least reliable cars on the market. So, before you buy, check customer satisfaction surveys and research specific models you’re interested in to find out just how reliable these vehicles are.
  • Condition – Minor wear and tear won’t affect a car’s depreciation rate much, but extensive damage will. This can include exterior bodywork damage such as large dents or deep scratches, and interior damage such as rips, tears, and large stains.
  • History – How many drivers have owned the vehicle, as well as its service history can also impact a car’s depreciation rate. The fewer owners the better, and this can be checked by ordering a vehicle history report. As for service history, a car's value is generally higher if it has been well maintained and that can be proven with service records and receipts.
  • Options and Extras – Those expensive options may seem cool, but less is more when it comes to depreciation. This is because used car buyers are typically looking for the best value, rather than unnecessary extras. Keeping in mind a future sale, it’s best to limit the amount of options chosen. Those that depreciate the most include power sunroofs, heated/cooled seats, rear entertainment systems, and turbo- or supercharged engines.

Don’t Let Depreciation Get You Down

There’s no stopping depreciation, but you can control the type of new car you get and its equipment level. Each vehicle differs in depreciation rate, so when car shopping, make sure you keep that in mind with an eye toward selling it in the future.

If you have spotty credit, and are having trouble finding a dealership that can work with you, CarsDirect wants to help. We take pride in connecting people with damaged credit to local special finance dealers that have the lending resources available to help. Get started today by filling out our no-obligation auto loan request form.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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