What is Depreciation on a Car?

salesman passing over new car key

Whether you’re shopping for a new or used vehicle in the St. Louis area, you’ve probably heard of the term “depreciation”. If you’re unfamiliar with this term, that’s okay. Depreciation, in simple terms, is the decrease in the vehicle’s overall value over time. At Suntrup Automotive Group, we’ve compiled a simple guide on what vehicle depreciation is.

Meaning of Depreciation

So, what is depreciation on a car? Depreciation is the decrease of a vehicle’s value. If you buy a new car, depreciation starts as soon as you drive off the lot. In fact, most vehicles lose over 20% of their value within the first year and over half of their value within the first five years. It’s important to know that a vehicle’s depreciation significantly slows down after the first five years, which is why used vehicles can be a popular choice for St. Charles drivers.

Do Used Cars Depreciate?

With more miles and time, all vehicles eventually depreciate. Used cars do depreciate, but since most are near the five-year mark or older, the depreciation process is a lot slower on used cars. Because of this, used cars generally have better resale value than new cars. For a high-quality used car without the new vehicle price tag, a certified pre-owned vehicle is a great middle choice. Certified pre-owned vehicles are close to the five-year mark and are thoroughly inspected for quality.

How to Slow Down Depreciation

How is depreciation on a car determined? As mentioned before, most vehicles lose about 20% of their value within the first year and over 50% after five years. Many new cars already come with an estimated residual value after a certain amount of years. While depreciation on a car is unavoidable, there are ways that you can slow down the process. Here are some tips:

  • Following your vehicle’s routine maintenance schedule
  • Research different vehicle brands for reputability and reliability before making a decision. More reputable brands usually depreciate slower.
  • Reduce your vehicle use and try to avoid driving through Fenton more than you need to.
  • Purchasing a used car will slow down the depreciation process, especially if the vehicle is close to five years old or older.
  • Avoid too much customization on your vehicle, as this will negatively impact the value.

For more tips and tricks on how to slow depreciation and other car-buying questions, visit the finance department at Suntrup Automotive Group.

Turn to Suntrup Automotive Group for Your Car-Buying Questions

Contact us to help you go over your buying and leasing options and answer any of your burning car-buying questions. Let us help you make the smartest decision during your St. Louis car-buying experience.

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Suntrup Automotive Group 38.5214964, -90.3451239.