Depreciation is the term used to describe the reduction in asset value throughout the asset's useful life. The sales tax, original purchase price, gas prices, insurance premiums, auto loan interest rates, automaker's reputation, and repairs and maintenance are some of the variables that impact the useful life of an asset (and consequently its depreciation).

Besides your home, a vehicle or a car is one of the largest investments you'll ever make. It is well known that its value depreciates when a new car departs the sales lot. However, you may be surprised to learn that depreciation is frequently the highest single cost of car ownership.

Over a five-year period, depreciation makes up around half of your vehicle TCO (total cost of ownership). But, most people don't consider it when purchasing their new car. This is terrible because your car loses up to 20% of its value when you drive it off the sales lot.

How to Determine a Car Depreciation?

The depreciation of a car is challenging to determine. You must review the car model you are looking to purchase. The following are a few factors you must consider:

• Calculate the cost of a new car in that brand and model
• Consider the used cost of the same car brand and model.
• Take into account the used car's residual value to obtain a precise estimation of the car depreciation.

Many people use an average depreciation rate of 15% to 18% annually for two to six years after considering the initial attack on the value of the car in the first year.

Best Vehicles that Depreciate the Least

This article mentions some of the best cars by resale value with the least depreciation rate. The cars with the best resale values that don't change much yearly retain their value the best over five years. Buying a five-year-old car model is similar to buying a brand-new one since they might switch up the trim options or add new amenities, but their interior and exterior designs stay mostly the same.

Jeep Wrangler Unlimited

The 2015 Jeep Wrangler Unlimited is one of the best luxury cars that depreciate the least. Over a five-year period, the larger four-door Jeep Wrangler Unlimited lost the least to depreciation.

The Wrangler Unlimited benefits greatly from having a large cargo area. It never seems too outdated because of its recognizable squared-off shape, grille, and rounded headlamps.

This year, three trims were offered, with the option to purchase either the two-door or this four-door Wrangler Unlimited body styles. At a $39,995 base price, the Unlimited Rubicon grade was the most expensive. During five years, the value of the Wrangler Unlimited depreciates by an average of $12,000. Depending on your location, used vehicles may still be available for not too much less than the Manufacturer Suggested Retail Price (MSRP).

Porsche 911

How did the Porsche 911 maintain its worth so well while many more luxurious cars are on the list of those that depreciate value so fast? The 2015 Porsche 911 maintains low productivity levels, even for this vintage model, so the main problem is supply. This one is one of the most well-known and recognizable aspiration luxury sports cars that depreciate the least and has a lower starting price. Although it has a high ownership cost compared to its competition, it has an exceptional expected dependability score.

In 2015, the Porsche 911 started at $84,300, with top trims costing $194,600. These vehicles only depreciate on average by $56,000 over five years.

Subaru Impreza

The Subaru Impreza may not be a joyful or playful vehicle, but it offers enough space for the driver as well as the passengers. This model is considered among the most dependable and safest compact automobiles. Also, compared to other cars, Impreza has one of the best car resale values. 

The 2021 Impreza's MSRP was $18,795 for the base model with no extras. After five years period, the car's actual cost is $30,478. After that time, the expected depreciation cost for a 2021 Subaru Impreza model is $7,220.

Toyota Camry

Due to its dependability and comfort, the Toyota Camry has long been one of the most renowned sedans that depreciate the least. In the ranking of midsize sedans, Camry comes out on top, defeating competitors like the Nissan Altima, Honda Accord, and Hyundai Sonata. The automobile has a hybrid option and a standard gas engine for individuals who prefer improved fuel efficiency.

The base LE model of the 2021 Toyota Camry had an MSRP of $24,970 and had no options or additional perks. The estimated real cost of owning one is $31,206, with depreciation equal to $9,555 after a five-year period.

Bottom Line

The depreciation of a certain car cannot be predicted with accuracy by an automotive expert. You shouldn't buy a car because it won't lose value as quickly as another. You won't like the car you buy until you enjoy driving it. Even if it does retain its value, this is still true. The depreciation rate of a car can be affected by elements such as the economy, fuel costs, and maintenance. Take good care of your vehicle, and sell it before its mileage increases too much if you want to retain the depreciation down.