Posted on 1/31/2025
Have you ever noticed how a car’s value seems to plummet the moment it leaves the dealership? This phenomenon is referred to as depreciation, and it’s something all vehicle owners have to face. But why does it happen so rapidly? Whether you’re planning to buy a car, trade one in, or simply curious about the economics of car ownership, understanding depreciation can help you make smarter financial decisions. Let’s explore the key reasons behind this rapid loss in value. The Role of Depreciation Depreciation is the single biggest reason cars lose value quickly. It starts the moment you drive a new vehicle off the lot. In fact, a car can lose as much as 20% of its value within the first year of ownership, with the sharpest decline happening in the first few months. This rapid drop occurs because the vehicle transitions from being “new” to “used” the moment it’s driven, even if it’s in pristine condition. Why d ... read more