Reference
Car value glossary
The vocabulary behind car depreciation and resale value, defined in plain language — and kept consistent with how we actually measure it.
- Depreciation
- Depreciation is the decline in a vehicle's value as it ages — the gap between what it originally cost and what the used market will pay for it today. It is usually steepest in the first few years and is the single largest cost of owning most cars.See depreciation by model →
- Resale value
- Resale value is the price a used vehicle can command on the current market. It is the flip side of depreciation: a car that depreciates slowly has a high resale value. It moves with supply, demand, incentives, and condition.Best resale value cars →
- Residual value
- Residual value is the value a lender predicts a vehicle will have at the end of a lease, set in advance and written into the contract. It differs from resale value, which is the actual price observed on the used market rather than a forecast.
- Value retention
- Value retention (or retained value) is the percentage of a vehicle's original price it still holds after a period — commonly five years. It is simply 100% minus the depreciation percentage: a car that has lost 40% of its value has retained 60%.
- Resale score
- The CarResaleValue resale score is the estimated percentage of original value a model retains after five years — that is, 100 minus its five-year depreciation. A score of 80 means the model is estimated to keep about 80% of its value. It is a value-retention measure, not a reliability or owner-satisfaction rating.How we calculate it →
- Depreciation cliff
- A depreciation cliff is a point — often a specific model year or age — where a vehicle loses value unusually quickly compared with the years around it. Buying just past a cliff captures the steep drop the previous owner already absorbed.
- MSRP
- MSRP (Manufacturer's Suggested Retail Price) is the price a manufacturer recommends for a new vehicle. It is the baseline we measure depreciation against — every used price is compared to the original base MSRP for that VIN's configuration.
- Book value
- Book value is an estimated vehicle value published by a pricing guide such as Kelley Blue Book or NADA. It is a reference point derived from broad data, not a guaranteed offer — the price a specific car actually sells for can land above or below it.
- Trade-in value
- Trade-in value is the amount a dealer offers for your current vehicle when you buy from them. It is typically lower than the private-party price because the dealer must recondition and resell the car at a profit.
- Private-party value
- Private-party value is the price a vehicle sells for directly between an individual buyer and seller. It is usually higher than the trade-in value but requires more effort to sell, and it sits closer to the observed asking prices used in our data.
- Total cost of ownership
- Total cost of ownership (TCO) is the full cost of owning a vehicle over a period — depreciation, fuel or energy, insurance, maintenance, repairs, taxes, and financing. For most cars, depreciation is the biggest single component, which is why resale value matters so much.Estimate depreciation →
- Asking price vs. sale price
- The asking price is what a seller lists a car for; the sale price is what it actually transacts at, which is usually a little lower. Because our data is built from listings, we apply a standard asking-to-sale adjustment so depreciation figures reflect realistic transaction values.Read the methodology →
- Mileage adjustment
- A mileage adjustment normalizes a used price to a standard mileage so cars of different odometer readings can be compared fairly. We normalize each listing to 12,000 miles per year for its age before measuring depreciation, so a low-mile and a high-mile example are put on equal footing.Read the methodology →