What Is Used Car Depreciation?
Car depreciation is the difference between what you paid for your car and what someone will pay for it today. It’s driven by the car’s age, kilometres, condition, service history, and how much demand there is for that make and model. You can’t stop depreciation, but you can choose when to sell so you lose less.
You’ll often see a figure of 25% a year quoted online. That number comes from the ATO’s diminishing value method for tax, which treats a car as having an eight-year effective life (Savings.com.au). It’s useful for business tax claims, but it isn’t the same thing as the price a buyer will actually offer you.
How Fast Do Cars Depreciate in Australia?
Cars lose value fastest in their first few years, then the rate slows. Here’s a general picture based on published Australian estimates. Your own car may do better or worse depending on the model and its condition.
| Stage of ownership | Typical value loss | Source |
|---|---|---|
| Driving a new car off the lot | About 10–15% | iSelect |
| End of the first 12 months | About 20–25% in total | iSelect |
| Years two and three | About 10–15% per year | CalculatorMate |
| After that | Slows to roughly 6–8% per year | CalculatorMate |
In dollar terms, the loss is still real in later years. What changes is why the value drops. Early on it’s mostly age. Later, kilometres, wear and upcoming repair bills matter far more.
Which Cars Hold Their Value Best?
Some cars lose value much more slowly than others. Toyotas have historically had strong resale values, and mainstream SUVs are among the strongest performers for retained value, while sedans generally aren’t, according to RedBook’s analysis reported by Canstar. Luxury European brands often depreciate faster than Japanese brands (CalculatorMate).
Other things that speed up depreciation:
• High kilometres for the car’s age
• Missing service history – buyers pay more for a car with a stamped logbook
• Accident damage or visible wear such as dents, rust and worn interiors
• Discontinued brands and models, where some buyers worry about parts and support
• Big price cuts on new models, which pull down the value of used versions
The Best Time to Sell a Car
The best time to sell a car is before it reaches a point that knocks its value down. Selling just before these triggers means you avoid paying for something that mostly benefits the next owner.
1. Before a major service or repair is due. A timing belt, new tyres or a brake job can cost hundreds or thousands of dollars, and you rarely get that money back when you sell.
2. Before a big kilometre milestone. Online listings let buyers filter by kilometres, so round numbers such as 100,000, 150,000 and 200,000 km act as cut-off points.
3. Before your rego renewal. There’s little point paying for another year of registration on a car you’re about to sell.
4. When repairs start costing more than the car is worth. This is the clearest sign it’s time to move on (more on this below).
5. When the car no longer suits your life. A car that sits unused still loses value, and it still costs you rego and insurance.
How Many Kilometres Is Too Many for a Used Car?
There’s no single number. Buyers look at kilometres relative to the car’s age – around 15,000 km a year is commonly treated as average (CalculatorMate) – and at the service history. A 10-year-old car with 150,000 km and a full logbook can be easier to sell than a five-year-old car with 200,000 km and gaps in its records.
What does change at high kilometres is the likelihood of a big repair. That’s why many owners choose to sell around these points, before the next major bill arrives.
Private Sale vs Trade-In vs Cash for Cars
How you sell affects how much of your car’s remaining value you keep. Each option suits a different kind of car.
| Option | Price | Speed | Effort | Best for |
|---|---|---|---|---|
| Private sale | Often highest for clean, popular cars | Days to weeks | High – ads, inspections, test drives, and usually a roadworthy certificate | Well-kept, roadworthy cars in demand |
| Dealer trade-in | Usually lower, offset against your next car | Same day as your purchase | Low | People buying another car from a dealer |
| Cash for cars (City Cash 4 Cars) | Upfront offer based on your car’s condition | Fast, with free towing | Low – we handle the paperwork | Older, high-km, damaged, unregistered or unwanted cars |
If your car isn’t roadworthy, read our guide to selling a car in Victoria without an RWC. To compare the two most common options in detail, see what pays more: trade-in or cash for cars.
How to Get the Most for Your Car Before It Loses More Value
• Gather your paperwork. Service logbook, receipts and registration papers all build buyer confidence.
• Fix only the cheap things. A new globe or wiper blade is worth doing. A major repair usually isn’t, because you rarely get the money back.
• Clean it inside and out. First impressions affect offers.
• Be upfront about faults. Honest descriptions lead to firm quotes and fewer surprises at pickup.
• Get more than one quote. Compare offers for the same car on the same day.
• Sell before the next big cost. Rego, service or tyres – whichever comes first.
When Selling for Cash Makes More Sense Than Keeping Your Car
A common rule of thumb is that if a repair quote is more than about half of what your car is worth, selling usually makes more sense than fixing it. It isn’t a hard rule – a car you rely on every day may be worth repairing – but it’s a good starting point.
Selling for cash also makes sense when your car is unregistered, not roadworthy, damaged, or simply sitting in the driveway losing value. For more help deciding, read should I repair my car before selling it? and how much is my car worth?
From our yard
[CLIENT INPUT: one real, anonymised example – e.g. “A 2012 sedan with 210,000 km came in last month. The owner had a $2,400 timing belt and water pump quote on a car worth about $3,000, so they sold it as-is instead.”]
How City Cash 4 Cars Buys Used Cars in Melbourne
City Cash 4 Cars is a Melbourne car removal company based in Campbellfield, VIC, that buys old, damaged, faulty and unwanted vehicles and provides free towing across Melbourne. If depreciation has caught up with your car, here’s how selling to us works:
1. Tell us about your car – make, model, year, kilometres and condition – by calling +61 457 063 569 or using our online quote form.
2. Get an upfront quote based on your car’s details.
3. Book a free pickup at a time that suits you, anywhere across Melbourne.
4. We handle the paperwork and you get paid when we collect your car.
We buy cars, vans, utes and 4WDs in any condition. Learn more about selling your used car or our cash for cars service in Melbourne.
Ready to sell before your car loses more value?
Call +61 457 063 569 or get a free quote online. Free towing across Melbourne, upfront quotes, and we handle the paperwork.
FAQ (Frequently Ask Questions)
How much does a car depreciate per year in Australia?
Most cars lose the most value early – around 20–25% in the first year – then roughly 10–15% a year in years two and three, before the rate slows to about 6–8% a year. The exact figure depends on the make, model, kilometres and condition.
What is the best time to sell a car?
The best time is usually just before a major cost: a big service, new tyres, a rego renewal or a large repair. Selling before a round-number kilometre milestone can also help, because buyers often filter listings by kilometres.
Does high kilometres affect how much I'll get for my car?
Yes. Kilometres are one of the biggest factors in used car value after age. Buyers compare kilometres against the car’s age, so a car well above the average of around 15,000 km a year will usually receive lower offers.
Do cars stop depreciating after a few years?
No, but the rate slows. After the first three years, many cars lose value more gradually. From that point, condition, kilometres and upcoming repair bills affect the price more than age alone.
