Question 1

How fast do cars depreciate?

Accepted Answer

A new car typically loses about 20% of its value in the first year and roughly 15% per year after that. By 5 years most cars have lost around 60% of their original value, though luxury and economy cars depreciate at different rates.

Question 2

What is the reducing-balance depreciation method?

Accepted Answer

Reducing-balance (declining-balance) depreciation applies a fixed percentage to the remaining value each year. This mirrors real-world car depreciation, which is steepest early on and flattens out. The straight-line method instead deducts the same fixed amount each year.

Question 3

Which cars hold their value best?

Accepted Answer

Generally, pickup trucks, some SUVs, and reliable Japanese brands (Toyota, Honda) hold value well. Luxury sedans and electric vehicles can depreciate faster. Condition, mileage, maintenance history, and market demand also strongly affect resale value.

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