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Do Electric And Hybrid Cars Hold Their Value? A Look At The Best And  Worst Performers.

Do Electric And Hybrid Cars Hold Their Value? A Look At The Best And Worst Performers.

Do Electric And Hybrid Cars Hold Their Value? A Look At The Best And  Worst Performers.

When consumers buy hybrid or electric cars, they typically do so with a greater purpose.  Either they wish to help the planet by limiting the burning of fossil fuels and reducing emissions, or they want to save money at the pump. Many would consider themselves early adopters of new technologies, always eager to try the latest tech. But are hybrids and EVs better for your wallet? Considering resale value, are they a risky purchase? We will take a look at how hybrids and electric vehicles perform when it comes to the latest depreciation numbers.

CarEdge has calculated the annual depreciation of popular car models on sale in the United States. This free data available on the CarEdge Research Hub is extremely valuable for car shoppers. With these insights, it’s possible to determine which cars have historically been relatively good investments, and which ones have been underperformers.  

Head to the free Research Hub for all of today’s car depreciation numbers. 

Let’s Start with the Worst

Let’s start with the bad news for electric vehicle owners: some models are performing poorly in terms of value retention. Topping the list is the Tesla Model X, which retains just 43.15% of its value after five years, meaning it depreciates by 57%. The Tesla Model S follows closely with a 5-year residual value of 43.49%. Similarly, the Nissan LEAF depreciates by more than half, with a 5-year residual value of just 45.56%. These EVs, despite their fuel efficiency, lose significant value over time, outpacing any potential fuel savings.

The Better Performers

On the other end of the spectrum, some hybrids and electrics hold their value exceptionally well. Leading the pack is the Toyota Prius, with a remarkable 5-year residual value of 68.92%, making it one of the best vehicles for resale, hybrid or otherwise. The 2025 Toyota Camry, now exclusively available as a hybrid, also shines with a 5-year residual value of 65.09%. Both models offer exceptional fuel efficiency and long-term financial value, making them solid investments for those who prioritize fuel savings and resale value.

What About Tesla?

No article about hybrids or electric cars would be complete without a commentary on Tesla.  With such, we will tell you that the Tesla Model S – the only Tesla qualifying for 5-year results – ranks 75th overall among luxury cars.  The Model S, which cost roughly $90,000 when purchased in 2019, is today worth 43% of it’s value as new, being worth about $40,000 in 2024. Losing $50,000 of value is never fun, but that was the cost of being an early-adopter five years ago. Our take is that Tesla deserves credit for producing a fully-electric car, and still having it be worth something meaningful with its technology 5 years old, and after you’ve put some significant miles on it.  

The Bottom Line

Our take on whether hybrids and electric cars offer good resale value can be summed up with a classic “it depends.” Some models, like the Toyota Prius and Camry Hybrid, have proven to retain their value remarkably well, making them smart investments when paired with fuel savings. On the other hand, vehicles like the Nissan LEAF and Tesla Model X suffer significant depreciation over time, despite their tech-savvy appeal. The smart car shopper will always do their homework, assess depreciation trends, and choose wisely to maximize value retention over time.

Check our the complete rankings of the cars with the best and worst depreciation, updated for 2025.

Do You Have Equity In Your Car Lease? It’s Worth Finding Out.

Do You Have Equity In Your Car Lease? It’s Worth Finding Out.

Whether you’re considering a lease for your next car or currently have a car on lease, you’re probably aware that a lease gives you no ownership. However, many dealerships processing end-of-lease returns neglect to mention an important detail. In some cases, when a lease is returned, the car has equity on it worth hundreds or even thousands. It’s called lease equity, and it’s money that should go in your pocket.

What lease equity means

car lease equity - what to do at the end of a lease

When you lease a car, you don’t get to drive it as much as you want. Rather, the lease is made out for a specific mileage level. Depending on the model and contract, you could be allowed anything from 30,000 miles to 60,000 miles in the three years that you keep the car. If you go over your mileage limit, you will be charged for overages when it’s time to return the car at the end of the 36-month lease period. This can be an expensive miscalculation on your part, so be careful to not exceed your mileage limit, unless you’re prepared to pay up at the end.  

Should the opposite happen – if you manage to drive less than you’re allowed – you’ll have ended up paying more for the car than you’ve actually used. It’s this difference that makes up the equity that you have in your car. When the dealership sells the car on the used market, they are likely to get more than they originally hoped for, as they expected the car to have more mileage. They should give you a share of this windfall. Depending on the model and how many miles you’ve managed to save, you could have equity worth a substantial sum of money in the car.

What do you get for lease equity?

Most dealerships don’t pay cash for the lease equity that your car brings them. Rather, they offer to give you credit that you can put towards your next lease, buying a new car, or even if you decide to buy the leased car outright. That’s always an option. Unfortunately, dealerships are often less than upfront about lease equity, and often fail to bring up the subject in the hope that their customers won’t know enough to ask.

See all of your lease-end options

Before you hand in the key at the end of your lease, it’s important that you look at the odometer and determine how many miles you’ve saved. If you’re under your lease mileage allowance, you should bring it up when it comes time to give back the car. Doing so could save you a lot of money in the form of a hefty discount on your next car.

Four Things to Do When Test Driving a Car

Four Things to Do When Test Driving a Car

You should never buy a car without first taking it for a test drive. If you are new to the car buying game, you may not know what to watch out for during a test drive. Here are four things to pay attention to when you test drive any vehicle.

1) Test all of the features 

how to test drive a car - test all of the features

A modern car is loaded with screens, knobs, and buttons. You may not need them most of the time, but you should be confident that they will work if and when you do need them. Before you begin your test drive, try out all of the various tools and accessories in the vehicle, such as windshield wipers, seat adjustments, mirror adjustments, window controls, radio controls, and even the sound system. 

If the car salesman tries to rush you, kindly let them know that you will need some time to review everything, and that when you are done, you will seek them out for your test drive. If everything works well, it’s a good sign; if not, you’ve got a list of things to review with them. Remember, you are likely buying the car as-is, so discovering that the defroster motor doesn’t work, after the fact, may cost you.

2) Don’t stick to predetermined routes

how to test drive a car - drive like you normally do

When you are out on a test drive, the sales associate who rides along may try to persuade you to do a quick drive around the block before heading back to the lot. However, this route most likely won’t allow you to gain a complete understanding of the car’s performance. The best way to do so is to test drive it on an unplanned route that includes both highway and city driving. This will allow you to get a better understanding of how the vehicle accelerates, how the brakes perform, and the ease with which it turns in tight corners. Drive the car the way you would drive it everyday.

3) Connect your smartphone

how to test drive a car - connect your phone

Smartphone connectivity has become one of the top features that potential car buyers look for. Not all cars have Apple CarPlay or Android Auto. The ease with which you can connect your phone to the vehicle can vary quite a bit from one car to the next. Depending on the car you are in, you may be able to connect your smartphone with a simple touch, or you may have to navigate through menus to accomplish the task. Test the smartphone connectivity as a part of the test drive. There’s nothing more frustrating than not being able to listen to your music when you get a new car.

One important note: don’t forget to unpair your phone when you’re done!

4) Understand the new tech

how to test drive a car

If you are upgrading your car, you may encounter a host of new tech features that weren’t there in your previous vehicle. These may include adaptive cruise control, lane-keep assist, automatic emergency braking, and even more advanced tech like Autopilot. Take the time to understand them and test them out before you make your purchasing decision.

Don’t rush through the test drive

Test driving a car is one of the most important steps in the car-buying process. By taking the time to test all the features, choosing a diverse driving route, connecting your smartphone, and understanding the new technology, you can make a more informed decision and avoid surprises later on. Remember, you’re not just test driving for a quick feel; you’re assessing how well the car fits your daily needs. The more thorough you are, the better chance you have of finding the right vehicle for you.

What’s An Upside-Down Car Loan? It’s A Growing Problem In America

What’s An Upside-Down Car Loan? It’s A Growing Problem In America

The term “upside down” doesn’t sound like much fun. Generally speaking, you want to be “right side up”, and that is definitely the case when it comes to an auto loan. Within the auto industry, being upside down in a car loan simply means that the balance on your loan is greater than the value of your car. Below are some helpful tips on how to make certain that you don’t find yourself in this position on your car loan.

Buying New Isn’t Always Best

If you’re thinking of buying a new car, you have to realize that it will lose value as soon as you drive it off the dealer’s lot. Once you hit the street, that car or truck technically becomes used, and it’s no longer priced like something that is brand-new. The speed at which vehicles lose value is greatest in the first year of ownership, where the average new car loses 23% of its value in just the first 12 months. If you want to avoid being upside-down on a car loan, a new car may not be the best choice for you.

Buy Vehicles With The “Best Value”, Not The “Best Price”

cars with the best resale value

Buying new is nice, but financially, it can set you back. On the other hand you can buy an old clunker, but risk throwing money at repairs. So, where is the sweet spot? Our recommendation is that you should buy a vehicle that is between 2 and 4 years old, is still under its factory warranty, has plenty of useful life left in it, and still looks and drives like new. An average car or truck will decline 38% in value in the first three years, so buying one in this range offers savings of 30-40% off its price compared to new.  In other words, someone else’s loss can be your savings.  

It also helps to buy a car (whether new or used) that has a good resale value. Research depreciation, maintenance costs, and more with the free CarEdge Research Hub.

Don’t Be Lured Into Longer Loans

In years past, a 5-year loan was the longest loan term offered by lenders. Today, car buyers are lured into the prospect of lower monthly payment; not by getting a better price, but by just stretching out the time period to pay off the vehicle.  Loans of 6, 7, and even 8 years, are now common in vehicle financing. This is a dangerous path that car buyers should try to avoid. Learn more about the serious risks of 84-month car loans.  

Credit Scores And Interest Rates Drive Monthly Payments

As most are aware, lower credit scores translate into higher loan interest rates, and as a result, higher monthly car payments. As a car shopper, you’ll want to check your credit report ahead of time. Make sure that the report is accurate, and doesn’t have any errors. Importantly, the lower your interest rate, the quicker your loan balance will fall, and the less likely that you’ll be upside down.  

Big Down Payments Can Avoid Big Loan Problems

If you have the financial flexibility, one of the best ways to ensure that you’re not upside down in a car loan is to make a big down payment when you buy. Another option is to make a larger down payment when you refinance your auto loan.  

The more money you put down, the lower your loan balance, and the greater the chance that you won’t have an upside-down car loan. Better yet, your monthly payments will be lower with a larger down payment. Those who put down little or no money for a down payment increase their chances that they will be upside down in their loan for years to come.

Final Thoughts: You CAN Avoid Upside-Down Car Loans

Staying financially “right side up” with your car loan comes down to smart choices: avoid long loan terms, consider buying a used vehicle with solid resale value, and put down as much as possible upfront. By being aware of depreciation, improving your credit score, and securing a favorable loan, you can reduce the risk of an upside-down car loan. With the right approach, you can drive away with a deal that works in your favor.

Download our Negative Equity Report for more information.

Car Ownership Costs Beyond the Price Tag: What to Expect

Car Ownership Costs Beyond the Price Tag: What to Expect

car ownership costs

When buying a car, most people focus on the sticker price, but the total cost of owning a car goes far beyond that initial figure. While the purchase price is a major consideration, ongoing costs like insurance, maintenance, depreciation, and financing can add up quickly. Understanding these hidden expenses is crucial for making a smart financial decision. Whether you’re buying new or used, being aware of the true cost of owning a vehicle can save you from unexpected financial strain down the road.

Depreciation

Depreciation represents the value loss of a vehicle from the moment it’s purchased. A car’s value often drops as soon as it’s driven off the lot, and this affects both new and used vehicles. While you don’t pay depreciation directly, it’s important to account for it if you plan to sell your vehicle in the future.

Luckily, calculating depreciation is straightforward. At the CarEdge Research Hub, we provide updated depreciation data to give you a clear picture of your car’s value over time. Check out depreciation rates for your car to make more informed decisions.

In rare cases, vehicles may increase in value due to high demand, such as collector cars. But for the majority of cars, depreciation is inevitable.

Insurance Premiums

When you purchase a vehicle, you will be required to purchase insurance. If you are financing a vehicle, it will be mandatory that you get full coverage insurance. If you purchase a car and pay it in full, you can choose to get liability insurance. Full coverage is going to cost more due to the comprehensive coverage that you get compared to liability insurance. Insurance policies can cost anywhere from $50 up to $300+ per month depending on the vehicle, the type of coverage you get, and your recent driving history. 

For those with speeding tickets or accidents on their record, insurance costs may be higher. Always get insurance quotes before purchasing a vehicle to ensure you can afford both the car payment and the insurance premium.

Maintenance & Repairs

Maintenance and repairs are inevitable parts of car ownership, and these costs can vary depending on the make, model, and age of your vehicle. Regular maintenance like oil changes, tire rotations, and brake checks are essential for keeping your car in top condition and can help you avoid costly repairs down the road.

To reduce long-term costs, follow your vehicle’s maintenance schedule and consider setting aside an emergency fund for unexpected repairs, such as transmission or suspension work. Some repairs are unavoidable, but taking proactive steps can minimize expensive breakdowns.

See average maintenance costs for your car at the CarEdge Research Hub

Financing

When financing a car, interest can significantly increase the total cost of ownership. The longer the loan term and the higher the interest rate, the more you’ll end up paying. Let’s break it down with an example:

Imagine you finance a car for $30,000 with a 5% annual percentage rate (APR) over 60 months. Over the course of the loan, you would pay about $3,968 in interest, bringing the total cost of the car to $33,968. If you extend the loan term to 72 months, you’ll pay an additional $1,043 in interest.

To minimize the cost of interest, consider opting for a shorter loan term and shop around for the lowest APR. If possible, improve your credit score to qualify for better rates. Additionally, making a larger down payment can reduce the total loan amount, helping you save on interest over time.

Compare refinancing rates all in one spot

Other Costs of Vehicle Ownership

There are a few other expenses that you should take into consideration when it comes to owning a car. State registration fees are a great example of a yearly fee you can count on paying each year you register your vehicle. This will vary state by state, so check with your local DMV to see what your current state registration fees are. Many states levy ‘property taxes’ on vehicles based on the value of the car. These vehicle property taxes can add up to a few thousand dollars per year for luxury vehicles and expensive trucks.

Tires are another maintenance item that can add up over the years. These days, a set of four quality tires can cost $1,000 with installation and disposal fees. Tires increase in cost with larger and more uncommon sizes. 

A Car’s Total Cost of Ownership Can Vary Widely

In conclusion, the total cost of owning a car goes far beyond the initial purchase price. Key factors like depreciation, insurance, maintenance, and financing charges can significantly impact your overall expenses. Some cars depreciate faster, others come with higher maintenance costs, and interest rates on car loans can add up over time. Be sure to evaluate all these variables when determining whether a vehicle is the right financial decision for you. By understanding the true cost of ownership, you can make smarter, more informed choices.