Why Does Depreciation Matter When Buying a Car?
Depreciation is the single largest cost of car ownership, often exceeding fuel and maintenance combined over a 5-year period. A new car typically loses 15–25% of its value in year one alone. Understanding depreciation helps you choose a model that holds value well, set the right residual value in a lease, and decide the optimal time to sell or trade in. Trucks and SUVs consistently hold value better than most sedans, while EVs show wider variation depending on brand and model.
Rates Used in This Calculator
The residual value percentages in this calculator are based on average US market depreciation data for each vehicle category. Individual results vary significantly based on mileage, condition, accident history, trim level, and regional demand. Use this as a planning guide, not a guarantee of resale value.
Frequently Asked Questions
Years 3–5 are generally the sweet spot. After year 1's steep drop, depreciation slows, but the car is still appealing to buyers. Waiting past year 7–8 often means the car is worth so little that selling provides minimal benefit over keeping it.
Yes, slightly. Neutral colors (white, black, silver, gray) consistently retain value better than unusual colors. A car in an unpopular color can fetch $500–$2,000 less at resale compared to the same model in a standard color.