A car depreciates by 20% of its value each year. If it was initially valued at $25,000, what will its value be after 3 years?

Thu, 16 Apr 2026 05:23:12 +0000

**A car depreciates by 20% of its value each year. If it was initially valued at $25,000, what will its value be after 3 years?** Curious about how quickly vehicle value declines? In the U.S., the average car depreciates about 20% of its current value each year—a steady downward trajectory driven by wear, mileage, and market demand. This pattern sparks growing interest as owning cars becomes a mindful financial choice, especially when planning purchases, trade-ins, or long-term investment. If a vehicle starts at $25,000, here’s how its value evolves over three years with consistent 20% annual depreciation. Each year, the loss equals 20% of the previous year’s value, meaning the car retains 80% of its worth yearly. This steady decline creates predictable but impactful drops in valuation—critical knowledge for realistic budgeting and decision-making. **Year 1: $25,000 × 80% = $20,000**
**Year 2: $20,000 × 80% = $16,000**
**Year 3: $16,000 × 80% = $12,800**