Dec 22, 2025
Cars are depreciating assets, which means they lose value over time. Although most cars, other than some collectible models, get cheaper as they get older, some see their values plummet faster than others.
On average, new cars lose around 30% of their value in the first two years. In the years after that, vehicles continue to lose an average of 8% to 12% in value each year, according to Kelley Blue Book (1).
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Of course, factors like mileage and service history impact a vehicle’s value. But other details, like the desirability of the model, can help a vehicle’s value avoid a free-fall — or accelerate its decline.
As you shop for a vehicle, opting to purchase one on the fast track to a lower value might not be a good move. Luckily, some options are easier on the balance sheet.
The 3 models poised to plummet
The three vehicle models expected to plummet in value in 2026 include the Nissan Altima, Tesla Model S, and Cadillac CT4, according to Aol.com (2).
The Tesla Model S is facing an onslaught of factors pushing down its value. For starters, electric vehicles, like the Model S, tend to drop in value more quickly than other types of vehicles, like hybrids and trucks. Additionally, Tesla’s leader, Elon Musk, became a leader in the Trump administration, slashing government jobs and life-saving international aid programs — and in the process, setting off a backlash that hurt the brand’s sales (3).
For drivers seeking a luxury car with fuel-friendly features, consider the 2025 Volvo S90 Plug-in Hybrid. Its suggested retail price of $61,391 is significantly lower than the Model S’s $86,630 (4). In general, Volvos tend to retain their value better than other luxury vehicles (5).
On the other hand, a vehicle set to lose significant value in 2026 is the 2025 Nissan Altima. With a suggested price of $28,140, this relatively affordable ride might lose more than 50% of its value in the first five years. With Nissan’s plans to shut down its Mexico plant and discontinue the Altima after this year, the model is expected to see a quick slide in value (1).
A potential alternative to the Nissan Altima is the Toyota Camry. Starting at around $29,000, it’s a similar price, but expected to depreciate at a much slower clip (6).
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The last one on our list of vehicles expected to depreciate dramatically in 2026 is the Cadillac CT4. Like Nissan with the Altima, Cadillac is discontinuing the CT4, which sets it up for a stark drop in value (7).
The Lexus IS300 represents a possible alternative. Although its starting price is $41,830 compared to the CT4’s $35,600, more elevated features and a more lasting value might make the upgrade worthwhile (8).
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How to pick a car for your needs and budget
When you explore your vehicle options, it’s important to find one that suits both your needs and your budget. Consider setting one car shopping priority to help you cut through your options. For example, you might be mostly concerned about fuel efficiency, safety, space, or something else. Pick a guiding star can help you more easily sort through the seemingly endless car insurance options.
In terms of budget, as a starting point, one guideline suggests spending no more than 15% of your take-home pay on a monthly car payment, ideally much less. So if you bring home $4,000 each month, then you wouldn’t want to spend more than $600 on a car payment.
But the monthly payment isn’t the only cost you’ll need to fit into your budget. You’ll also face other vehicle costs like maintenance, gas, tolls, and insurance. Before purchasing the vehicle, shop around for insurance. Different vehicles come with differing insurance premiums, which should come into play when making your purchasing decision.
If financing a vehicle, make the effort to save up for a down payment, ideally at least 20%. Additionally, it’s a good idea to shop around to find the best interest rates. Although obtaining financing through the dealer might be the easiest route, it’s usually not the most economical. Finally, consider opting for a short-term car loan of 36 or 48 months to avoid getting stuck with payments — and interest — for five years or more.
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Kelley Blue Book (1); AOL (2); CBS (3); Edmunds (4); CarBuzz (5); CarEdge (6); Edmunds (7); Lexus (8)
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Sarah Sharkey is a personal finance writer who enjoys helping people make optimal financial decisions for their situation. She loves digging into the nitty-gritty details of financial products and money management strategies to root out the good, the bad, and the ugly. Her goal is to help readers find the best course of action for their needs.
