A car depreciates in value by 15% per year. If it was bought for $25,000, what will its value be after 3 years?

Tue, 21 Apr 2026 14:02:46 +0000

**A car depreciates in value by 15% per year. If it was bought for $25,000, what will its value be after 3 years?** When people wonder, *“A car depreciates in value by 15% per year. If it was bought for $25,000, what will its value be after 3 years?”* they’re engaging with a question that blends practical finance, long-term planning, and the harsh reality of assets—particularly automobiles. With the ongoing rise in vehicle ownership and shifting consumer habits around mobility, understanding depreciation isn’t just academic—it’s a essential piece of smart financial literacy across the U.S. Car depreciation is a predictable reality: most vehicles lose significant value within the first few years, driven by mileage, wear, technology obsolescence, and market demand. On average, a new car depreciates about 15% in its first year and roughly 15% again in the second year, creating a cumulative drop that shapes long-term ownership costs. For a $25,000 vehicle, this means more than just common sense—it’s a measurable financial trend influencing decisions about buying, selling, and keeping cars over time. Analyzing depreciation through the 15% annual rate presents a solid foundation. Using simple compounding, current value after three years calculates to approximately $12,290—*not* a sudden plunge, but a steady, consistent loss. This figure highlights how small percentage losses multiply yearly, reinforcing why timing and vehicle choice impact total ownership expenses.