What Is the Average Car Depreciation Rate?

Get Car Financing
Even with poor credit.

By

Automotive Content Editor

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, Automotive Content Editor - October 27, 2021

Cars depreciate at different rates depending on a number of factors. The average loss of value over time starts as soon as you drive a new vehicle off the lot, and has the biggest impact on the resale value of your vehicle. Depreciation doesn't impact used cars in the same way as it takes a toll on brand-new vehicles. Here's a look at average car depreciation rates and what they mean for drivers.

The Average Rate of Depreciation

According to a recent study by iSeeCars, the current average rate of depreciation is 40.1% in five years. This is down from 49.1 % last year, due to the increased price of used cars. Even though vehicles aren't losing as much value currently, having almost half their value gone in five years is pretty significant.

This means, in a broad sense, that cars depreciate an average of 8.02% a year. However, most of your vehicle's depreciation happens in the first year of ownership. Typically, it's said that vehicles lose around 11% of their value as soon as their tires touch the road. That depreciation increases as the year wears on, and some vehicles lose around 15% to 25% of their value in that first year. Depreciation generally happens around 15% a year after that, depending on the make and model.

What Impacts Depreciation?

After that, the condition and desirability of the model remain the determinants of the car's worth. Your vehicle is likely to continue to lose value, not because of depreciation as such, but due to continued use that increases mileage and affects its overall condition.

The biggest impacts on vehicle value are their age, mileage, condition, and brand name. Some makes and models are known for holding on to their value better than others, such as Toyota, Honda, and Subaru. These brands continue to have good customer reviews, safety ratings, and reliability. This makes these vehicles depreciate more slowly since they remain desirable years into their life.

Unfortunately, EVs tend to lose value quickly and depreciate faster than traditional gas engine vehicles, this makes them worth less when you sell them, but makes them a great option for an affordable used car.

Looking for Another Vehicle?

If you're shopping for a new car it's important to research how well a car keeps its value. If you're looking for a used vehicle, knowing which cars depreciate least can help you find a reliable one. No matter what you're seeking, start here at CarsDirect.

We've gathered a nationwide network of special finance dealerships that can work with many types of borrowers, even those with credit challenges. Don't hesitate to find your next vehicle with us. Get started on the path toward a dealer in your area by filling out our fast, free car loan request form.

$1 Credit Report

Get your credit score now!
Get a copy of your most recent credit report too.

Get Your Report & Score

Auto Refinance

Refinance your car or truck now. Get a better interest rate and lower payment.

Refinance Your Car

Vehicle Warranty

Protect your vehicle and you could save thousands on auto repairs.

Get a Free Quote

Need a Car Loan?

It only takes a minute.

, Automotive Content Editor

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


Search New Cars by Loan Payment »

View estimated loan payments based on local rebates and financing offers.

Loan approval is not guaranteed and is subject to credit application and approval of the lender. Individual loan terms may vary. Use of this website constitutes acceptance of CarsDirect.com's Terms of Use, Disclaimer, Privacy Policy, and Cookie Policy.

Privacy Policy|Do Not Sell My Personal Information|Terms of Use|Cookie Policy|Disclaimer|
COPYRIGHT 1999-2021 MH Sub I, LLC dba CarsDirect.com