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New cars lose 20% of their value the moment they drive off the lot

New cars lose 20% of their value the moment they drive off the lot

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True. “The first hit on the car is basically immediate,” said Richard Arca, director of vehicle valuations and analytics for Edmunds.

If you traded in your vehicle within a week or so, you’re losing the sales tax and fees you paid on the car — about 11%.

Plus, the dealership will offer you less since the car is no longer new and it needs to make a profit on the sale.

That will lead to a further drop of 8%-10%, Arca said.

Ultimately, the dealership will plan to sell it for around 4% less than what a new one would go for, he added.

On average, a new vehicle depreciates by 30.5% in its first year, 7.7% in the second and 6.8% in the third year, according to Edmunds data.

This depreciation figure is an average among all brands, but as a general rule, luxury vehicles will depreciate faster, while vehicles with higher resale value (a Toyota Tacoma, for example) will be closer to 20% in the first year.

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