Used Car Depreciation

Many new car buyers are concerned about how fast their car’s value drops once the car is driven off the lot. When you purchase a car you pay retail but then the moment you leave the dealership with the car it’s worth then becomes it’s wholesale price. Retail is what you pay when you purchase a car and wholesale is what a car dealership will offer to pay for the car.

This wholesale price is often referred to the Black Book value because; “The Canadian Black Book” is a company that supplies wholesale and retail data to most dealerships and lending institutes. Black Book determines the vehicle depreciation based on the vehicle condition and on a percentage of it’s value from the previous year.

Here are a few basics in regards to vehicle depreciation:

  • A car will lose between 15% to 20% of its value each year.
  • A 2 year old car is worth 80% to 85% of what its value was after its first year.
  • A 3 year old car is worth 80% to 85% of what its value was after its second year.

1 year old used vehicle = $16,000
2 year old used car = $13,600
3 year old used car = $11,560

A new vehicle depreciates the most in it’s first year because you have paid retail and the car is realistically only worth a wholesale value once you have driven off the lot.

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