A car depreciates 20% per year. If it costs $25,000 now, what will it be worth after 3 years?

Tue, 05 May 2026 00:45:37 +0000

**Why a Car Loses Value Fast—And What That Really Means for Buyers in 2025** You’ve probably seen the curve on your screen: a $25,000 vehicle losing roughly 20% of its value each year. If you’re considering buying or holding a used car, this depreciation pattern isn’t just a statistic—it’s a key factor shaping long-term investment. With rising interest rates, shifting preferences toward electric vehicles, and a growing awareness of total cost of ownership, understanding how cars lose value is more relevant than ever. This guide breaks down the math behind 20% annual depreciation, why it matters today, and what buyers should know to make informed decisions. **Why A Car Depreciates 20% Per Year—And Is It Really That Obvious?** When people ask, “A car depreciates 20% per year. If it costs $25,000 now, what will it be worth after 3 years?” they’re tapping into a measurable economic reality. For most conventional vehicles, depreciation averages 15–25% annually, with 20% serving as a widely accepted benchmark. This rate reflects how quickly manufacturers lose value due to new models, wear and tear, and changing buyer demand. Over three years, even steady 20% depreciation compounds significantly—turning a $25,000 car into roughly $14,400 after three years, assuming constant rates. For many, this drop raises critical questions about whether today’s purchase holds long-term financial value.