Everyone knows a new car loses money the moment it leaves the lot. What nobody mentions is that the loss isn't spread evenly — and the worst year isn't the first one.
The curve has a cliff in it
Tracking median asking prices by model year across our value data, the year-over-year drops go like this:
| Model year | Median value | Drop from previous |
|---|---|---|
| 2025 | $44,083 | — |
| 2024 | $41,786 | -5.2% |
| 2023 | $36,709 | -12.2% |
| 2022 | $30,425 | -17.1% |
| 2021 | $29,259 | -3.8% |
| 2020 | $24,702 | -15.6% |
| 2019 | $21,355 | -13.5% |
| 2018 | $19,132 | -10.4% |
The steepest single drop lands at the three-year mark: 17.1%. The first year off the lot is the gentlest at 5.2%. That's the opposite of the folklore.
Why year three hurts
Three years is when the leases come back. Fleets of nearly identical, well-kept, low-mileage cars hit the used market at once, and supply does what supply does. It's also when the factory warranty typically ends, which moves the car into a different buyer's price bracket.
One caveat I'd state plainly: the 2021-2022 pair shows only a 3.8% drop, which is a leftover from the supply shortage of those years rather than a normal market. Read the shape of the curve, not any single step.
The practical version of this: a two-year-old car and a three-year-old car are much further apart in price than in condition. That's the window where the same money buys noticeably more car, and where checking the actual market range pays for itself.
How I'd use it
Buying: aim just past the cliff. A car at three or four years has taken the biggest hit already, still has plenty of life, and costs a third less than the two-year-old version of itself.
Selling: the maths runs the other way. If you're near the three-year mark and thinking about it anyway, moving before that drop is worth real money — and understanding how depreciation compounds matters more than any single valuation. Either way, check the car's record first; an unresolved recall knocks more off the price than a year of age.
Frequently asked questions
When does a car lose the most value?
Around the three-year mark. In our data the drop from the two-year-old to the three-year-old model year is 17.1%, against just 5.2% for the newest year.
What is the best age to buy a used car?
Three to four years old — past the steepest depreciation, usually still in good condition, and roughly a third cheaper than the two-year-old equivalent.
Why do three-year-old cars drop so much?
Lease returns arrive on the market in volume at three years, and factory warranties typically expire around the same point.
Denis Kataev is a serial solopreneur and the founder of ForCar. With 15+ years in software engineering and 10 years in SEO, he builds data-driven products end to end — backed by a sharp eye for design. At ForCar he mines proprietary vehicle datasets, turning raw numbers into buying advice you can actually trust.
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