Why do New cars depreciate faster than used cars?

You may have heard the phrase “this car will lose 20% of its value as soon as it leaves the lot!”.  Typically, people are referring to a NEW car’s depreciation or loss of value over time. Generally, new cars will depreciate faster than used cars because they are considered to be worth less as soon as they are purchased.

This is because cars are considered a depreciable asset, meaning that their value decreases over time. New cars depreciate faster than used cars because they lose a significant portion of their value as soon as they are driven off the dealership lot, compared to used cars, where this process has already happened (when the car itself was new).

The rate at which a car depreciates depends on a number of factors, including its make and model, age, mileage, and condition. Some vehicles, like garage-kept collector vehicles, can develop an “immunity” against depreciation, where their value even goes UP over time.