Depreciation Curves Explained in Plain English

A depreciation curve in the U.S. is simply how a car's value drops over time—fast at first, then slower. Here's what it means in plain English and how to use it when you buy or sell.

TL;DR Most cars lose the most value in the first few years, then the curve flattens. Year 1 is usually the steepest; years 4–5 and beyond slow down. Use the curve to decide when to buy (e.g., 2–3 years old to avoid the steepest drop) and when to sell. See depreciation for any car at autopremo.com.

What a Depreciation Curve Is (Plain English)

A depreciation curve is a line that shows how much a car's value drops over time. On a graph, the vertical axis is value (or % of original value), the horizontal axis is time (years). The line usually drops steeply at first, then flattens. That's the "curve."

In the U.S., a typical new car might lose 20–30% in year 1, then another 15–20% in years 2–3, then another 10–15% in years 4–5. So after 5 years, many cars are worth about 40–50% of what they cost new. The "curve" is that pattern—steep early, flatter later.

Model depreciation for any car at autopremo.com.

Why the Curve Is Steep at First

• "New" becomes "used" the moment you drive off. The biggest value drop is losing "newness."
• First year = first model-year change. When the next model year hits, your car is "last year's" car.
• Warranty and risk. New cars have full warranty; as time passes, warranty shrinks and repair risk rises—buyers discount that.
• Mileage and wear. Early years add miles and wear; the market prices that in.

So the curve is steep at first because newness, model year, warranty, and early wear all hit at once. Later, much of that is already "priced in," so the curve flattens.

See how depreciation affects total cost at autopremo.com.

How to Use the Curve When Buying

Buy used (2–3 years old) to avoid the steepest drop

If you buy a 2–3-year-old car, someone else took the steepest part of the curve. You pay less upfront and often lose value more slowly from there. That can mean lower total cost of ownership than buying new—depending on price, rate, and how long you keep it. Use autopremo.com depreciation and ownership cost tools to compare.

Buy new if you want full warranty and latest design

If you buy new, you take the steep part of the curve. You get full warranty and latest design—but you pay for it in depreciation. Use the curve to plan: assume you'll lose a big chunk in the first 5 years. Factor that into total cost. Use autopremo.com.

How to Use the Curve When Selling

Sell before a redesign if your car will look "old"

When a model gets a redesign, the previous generation often drops in value faster. If you're near the end of a generation, selling before the new design hits can mean a higher price. Use autopremo.com price checker to see current market before you list.

Sell when the curve is flatter (e.g., years 4–6) if you want to keep driving

If you keep the car into years 4–6, you're on the flatter part of the curve—you're not losing as much per year. So "driving it until it dies" can make sense if maintenance is reasonable—you've already taken most of the depreciation hit. Use autopremo.com to see how much value is left.

See depreciation and resale at autopremo.com.

Your Depreciation-Curve Checklist

• [ ] Understood: steep early, flatter later—typical US pattern
• [ ] When buying: considered 2–3-year-old to avoid steepest drop; compared total cost with autopremo.com
• [ ] When selling: considered timing (redesign, season); checked market with autopremo.com price checker
• [ ] When keeping: used curve to plan—flatter years = less loss per year

Get depreciation and total cost at autopremo.com.

Bottom Line

Depreciation curves in plain English: value drops fast at first, then slower. Use the curve when buying (e.g., 2–3 years old to avoid the steepest drop), when selling (timing vs redesign), and when planning total cost. Autopremo.com gives you depreciation and total cost tools so you can use the curve to make smarter decisions.