What is car depreciation?

Car depreciation is the difference between the amount paid for a car and its current value. It is often the biggest expense involved in car ownership.

The average new car is valued at about 40 percent of its original price three years after purchase. Used cars do not depreciate in value as quickly as new cars. Cars that are more fuel efficient tend to depreciate more slowly. Cars of new models offered by a particular manufacturer that continue to be available for many years may tend to depreciate more slowly than a car of a model that is about to be discontinued.