You have it the wrong way round. The depreciation slows down once a car gets to a certain age, this was generally considered 3 years old, not sure if it still is.

Heaviest depreciation is in the first year, slightly less in second year, less again in the third year and so on.

Hello all, hope you are all well,

Is it true that used car prices drop steeply once a car gets to 3 years old?

I've heard this said in the past, think its supposed to be that the price drops once a car has to have MOTs. Don't know if its just an urban myth or not?

Reason for asking is, I will have to replace my much loved 2008 Prius at some point and thinking about a Corolla Touring, they been out since 2019, so wondering if prices likely to become more affordable, when they get to 3 year old, in 2022.

Thanks, Mark

This tool might give you a general feel for how car prices depreciate over time:

https://www.themoneycalculator.com/vehicle-finance/calculators/car-depreciation-calculator/

The site also has estimates for specific models. Unfortunately, I think the Corolla is too new for accurate figures but the previous Auris lost about 47% of its value over 3 years. I would expect the Corolla to be broadly the same.

If you buy at 3 yrs old, you’ll have 2 yrs left of the Toyota warranty and someone else will have taken the major part of the depreciation hit. The car will continue to lose value but at a slower rate.

Edited by mcintosh on 28/04/2021 at 18:06

For each car the situation is different.

For instance, I remember seeing a car which was new at £22,000, but after 5 years it had done 70,000 miles and on sale for £10k. So if felt a pretty rubbish deal for the second owner. This situation is really for cars which are in high demand and hold their value well.

Yes, I did consider to Corolla Touring, but the ones which I saw, felt pretty good value (for a Toyota).

> so wondering if prices likely to become more affordable, when they get to 3 year old, in 2022.

I have seen two for sale. They looked very good value. Sometimes you can get bargains. You could wait until 2022 and regret not buying the two which I saw. It might not make much difference to wait until 2022.

Edited by Warning on 28/04/2021 at 21:32