A car loses a large share of its value in the first three years. After that, depreciation slows, and many of the cars are still under factory warranty.
In this article
- Where the value goes
- Lease returns create supply
- What to watch
Where the value goes
The steepest drop usually comes in year one, when a new car becomes a used car the moment it leaves the lot. By year three the curve is flatter.
| Age | Typical value left | Warranty status |
|---|---|---|
| New | 100 percent | Full |
| 1 year | About 80 percent | Full |
| 3 years | About 60 percent | Basic may be ending |
| 5 years | About 45 percent | Powertrain only |
Figures are approximate and change as rules, prices and technology change.
Lease returns create supply
Cars coming off three-year leases usually have regular service history and moderate mileage. Dealers sell many of them as certified pre-owned.
Let someone else pay for the first drive-off-the-lot depreciation.
What to watch
Check for accident history and look at tire wear. A few trims lose value faster than others, so research your specific model.
What to watch next
- Search for lease-return inventory
- Look at certified pre-owned programs
- Get a vehicle history report
- Have an independent mechanic inspect it
Practical tip
Percentages vary a lot by model. Trucks and some Japanese brands hold value better than luxury sedans.
Bottom line
For most buyers a late-model used car delivers the best value.
Specifications, prices and rules change. Confirm current details with the manufacturer or the relevant authority before you buy or repair.
