What Does Car Depreciation Mean?

Car depreciation is the decline in your vehicle’s value over time. As your car ages and racks up more miles, its market value drops—often more than people realize. In fact, depreciation is often the largest expense of car ownership, even more than fuel, insurance or maintenance.

When it comes time to sell or trade in your vehicle, depreciation is the difference between what you originally paid and what the car is worth at that point. For example, a brand-new car can lose up to 60% of its value in just the first three years.

Used cars generally depreciate more slowly, which is why they often offer better value over time. While many car buyers focus on sticker price, fuel economy and design, it's wise to also consider how quickly a car loses value. Choosing a model with slower depreciation can save you thousands in the long run—even more than choosing one with slightly better gas mileage.

What Influences Car Depreciation?

There are several key factors determining how quickly your car loses its value. When estimating your vehicle’s worth, keep the following in mind:

• Make and Model: As mentioned above, not all cars are created equal. Cars with a good reputation for reliability, high demand or an enthusiast following will always be more desirable on the used car market and hold their values considerably better over time.
• Overall Condition: A well-maintained car with only minor wear and tear will usually be worth more than one that has mechanical, electrical or cosmetic issues or is used heavily—like a work truck that’s seen a lot of off-road use.
• Vehicle History: A vehicle history has a major effect on the vehicle’s desirability and value. A vehicle with a history of accident damage or total loss may not be as desirable on the used car market and thus has above average depreciation.
• Age: Except for collectable and enthusiast vehicles such as classics, muscle cars and exotics, the older the vehicle, the less it will be worth.
• Mileage: Another factor that helps determine vehicle depreciation is how much it has been driven. High mileage typically signals more wear and a shorter remaining lifespan, which brings down a vehicle’s value. Lower mileage vehicles are usually more desirable to used car buyers.
• Number of Previous Owners: In most cases a car with fewer previous owners tends to be more desirable on the used car market. Single owner cars with all the service history tend to sell faster simply because they are perceived to be more cared for and thus less likely to have any significant defects or possible failures in the near future.
• Vehicle Specs & Options: Things like vehicle exterior and interior color, trim package, drivetrain and options can all influence how desirable the vehicle is to the used car buyer. For example, a neutral-colored vehicle like black, white or gray may hold value better than one with a custom or flashy paint job that doesn’t appeal to a wide audience. Similarly, features like a 4x4 or AWD (All Wheel Drive) may appeal to buyers in areas that get frequent snow falls and have adverse winter driving conditions.

Understanding these factors and using our car depreciation calculator can help you make smarter decisions when buying or selling your car. Also, by calculating depreciation rates for cars it may aid you as an invaluable research tool.

What Cars Have the Highest Depreciation Rates for 2025?

Currently the cars with the highest depreciation rate tend to be high end luxury cars. With a depreciation rate of above 60% for the first 5 years of ownership, the Maserati Quattroporte and the BMW 7 Series have taken the reins as the top depreciating cars in the USA for the last few years. This rapid depreciation is mainly attributed to their initial high cost and escalating service expenses with complex repair procedures required to keep all of the high tech features in proper working condition. Contributing to the high depreciation cost for the first 5 years of ownership is these vehicles lower-than-average reliability, making these two cars the highest depreciating vehicles on the market today.