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Getting out of a car loan can be a tough decision, but it’s often necessary if your financial situation changes or the loan becomes unaffordable. Whether you’re dealing with high monthly payments, unexpected expenses, or negative equity, there are options to address the issue.

From selling the vehicle to refinancing or negotiating with your lender, there are several ways to exit a car loan. Here’s a look at each and the factors to consider before deciding how to get out of your car loan.

How Do Car Loans Work?

Buying a new or used car is likely one of the biggest purchases you’ll make. The average cost of a new car in July 2025 is $48,699, according to CarEdge, so it’s no surprise that many car buyers need to finance their purchase with an auto loan.

When it comes to how auto loans work, you borrow money from a lender to cover the price of the vehicle you wish to purchase. As the borrower, you agree to repay that money over time in regular installments, including interest. You may also have to pay various fees associated with the loan.

Payments are made over a set period of time, known as the loan term. Terms can be anywhere from 12 to 84 months or even 144 months, though on average they are about 72 months for new cars and 65 months for used ones.

The shorter the term, the higher your monthly payments will likely be, but the less you’ll pay in interest. The longer the term, the lower your monthly payments will be. However, because interest payments are drawn out over a longer period, these loans may be more expensive in the long run.

In general, borrowers with strong credit scores (670 and up is considered “good”) and stable incomes will be offered good interest rates and terms.

Recommended: No Income Verification Car Loans

Can You Get Out of a Car Loan?

If, for some reason, you find that your auto loan is no longer working for you — perhaps you don’t need the car anymore or you can’t afford the payments — then it is possible to get out of your car loan.

5 Ways to Get Out of a Car Loan

Here’s a look at some of the options to see your way to getting out of car loan.

1. Selling Your Car

You can sell your car while you’re still making payments. Before you do, however, find out what the payoff amount is. This is the amount you still owe before you own your vehicle outright. Ideally, this is how much you’d garner from a sale.

First, you’ll need to find out what your car is actually worth, which you can do using online resources such as Kelley Blue Book. Subtract the amount you still owe from the car’s value. If the resulting figure is negative, you owe more on your loan than the car is worth. In other words, you have an “upside down loan” on your hands, and you have negative equity in the vehicle.

If you have negative equity, you’ll be required to make up the difference to ensure you repay your loan in full.

2. Trading in Your Car

If you’re having trouble affording your monthly payments, you may consider trading in your car to a dealer toward the purchase of a less expensive car. Weigh this option carefully, however, since dealer trade-ins usually offer less money than you’d get through a private sale.

3. Refinancing Your Loan

Another way to help you afford your monthly payments is by refinancing your loan. When you refinance, you pay off your old auto loan with a new one, ideally with a lower interest rate or lower monthly payments. One way to make your monthly payments more affordable is by extending the loan term. But beware, this can make the loan more expensive in the long run.

You may want to consider refinancing if interest rates have dropped or you’ve built your credit score, which helps you qualify for a loan with a lower rate.

Note: This option may not be worth it if the fees you’ll owe on your new loan outweigh the savings from refinancing.

Recommended: How to Calculate the APR on a Car Loan

4. Renegotiating With Your Lender

If you’re struggling with your auto loan payments, consider reaching out to your lender to renegotiate your car loan. Talk to them about your situation, and see what solutions they may have to offer. For example, if you are in some sort of financial distress and afraid of missing payments, your lender may be able to offer you forbearance on your loan, which puts payments on pause for a period.

Your lender might offer to extend your term without refinancing, or they might be able to modify your monthly payment to make it more manageable.

Recommended: Guide to Purchase Orders for Cars

5. Voluntarily Surrendering Your Car

This option is available to you if you’ve already defaulted on your loan and your lender is going to repossess your car. Voluntary repossession gives you more flexibility in how you return your car to your lender.

Recommended: Can You Extend a Lease on a Car?

Does Getting Out of a Car Loan Affect Your Credit?

Getting out of a car loan can hurt your credit. If you pay off your loan through the sale of your car, you may reduce your credit mix, one of the key components of your FICO® credit score. Seeking new credit through an auto loan refinance can also cause a dip in your credit score. Lenders worry that borrowers with new credit may be more likely to default on their loans.

However, your payment history is the biggest component of your credit score, so the thing that will hurt your credit most is missing payments, going into default, or having your car repossessed. Do what you can to avoid these possibilities, including refinancing, renegotiating, or selling your vehicle.

Recommended: How to Increase Value of Car

The Takeaway

If you no longer wish to have a loan for your automobile, there are certainly options to getting out of a car loan. Paying off the loan, whether with cash on hand or by selling your car and using the proceeds to do so, is the best way to clear your debt. Otherwise, if it is a question of finding a more affordable monthly payment, renegotiating, or refinancing.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

`h2 id=”faq”>FAQ

Will returning a car hurt my credit?

Returning a car can hurt your credit if it’s considered a voluntary repossession or if you fail to meet lease or loan obligations. Missed payments or repossessions negatively impact your credit score. However, if you fulfill all financial terms before returning the car, your credit score may remain unaffected.

Can I sell my car if I still owe money on it?

You can sell your car even if you still owe money on your loan. Your lender will keep the proceeds from the sale to help pay back the loan. If there’s a shortfall after the sale and you still own money, you’ll need to make up the difference.

Can I sell my car back to the dealership?

Selling your car to a dealership is certainly a possibility, but beware that dealerships often offer less money than a private sale.

Photo credit: iStock/Vladislav Stepanov

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q325-114

By getting a car loan with a 0% annual percentage rate (APR), you’ll avoid paying interest or fees on your loan. This can feel like scoring a great deal from your lender, but know that they don’t give away something for nothing.

To get one of these offers, you’ll usually need excellent credit, proof of stable income, and often a down payment. Additionally, there are potential downsides of 0% financing vehicles to be aware of.

Here’s a closer look at what to look out for, as well as how to get a 0% APR car loan.

What Is a 0% APR on a Car Loan?

A 0% APR car loan has no fees and no interest rate. That means that all of the money you repay each month goes to paying down your principal, or the amount you borrowed.

Usually, when you take out an auto loan, your lender will charge you interest on the loan as well as fees to cover the cost of processing the loan. Car loan interest rates are typically based on the amount of the loan, the loan term (the period over which you repay it), as well as factors like your credit score. A loan’s APR represents your monthly payment, including both interest and fees.

In general, 0% vehicle financing is offered through a car manufacturer or dealer through the organization’s captive finance company. Banks and other lenders typically do not offer 0% APR loans, as lenders make their money through interest and fees.

Dealerships, on the other hand, can make money through the sale of a vehicle, so they don’t necessarily need to charge interest. What’s more, if they offer a customer a 0% APR, that customer may be more likely to buy a new car, and they may be willing to spring for a pricier vehicle.

These 0% APR loan deals are usually only available for new cars, or in some rare cases, for certified pre-owned vehicles. A 0% APR loan is a type of secured auto loan. This means that if you miss a payment, the dealer can repossess your vehicle.

Requirements for 0% Financing on Vehicles

When a dealer offers you 0% APR, they’re taking a big risk. As such, you’ll likely need a relatively high FICO® credit score to qualify. In fact, you may need a credit score of 740 or higher.

The dealer also may require that you make a hefty down payment to qualify for such an auto loan interest rate. And even if you make the down payment, you’ll also likely need to prove that you have stable income that will allow you to keep up with future payments.

Recommended: Is Proof of Insurance Needed to Refinance?

Ways to Qualify for 0% APR on Car Loans

If you’re hoping to secure a 0% APR, there are some steps you can take that may make it more likely a dealer will offer it. Namely, you’ll want to do everything you can to keep your credit score high.

Making Payments On Time

There are several factors that make up your FICO score, each of which is weighted differently. Your payment history is the most important factor, comprising 35% of your score.

This may come as no surprise, since lenders will want to know that you have a track record of paying off your loans before they offer you a new one. Make sure you always make payments on time and in full on open lines of credit.

Reducing the Balance on Your Lines of Credit

The amount you owe represents 30% of your credit score. If it looks like you’re using most of your available credit, lenders may worry that you could be overextended and thus at greater risk of defaulting on a new loan. Paying your existing balances can help your score.

Another way lenders may evaluate whether you’re overextended is by examining your debt-to-income ratio (DTI), which is the amount of money you owe compared to how much you earn. Lenders see borrowers with lower DTI as less risky and more creditworthy. You can also lower your DTI by paying off outstanding debts.

Building a Long Credit History

Length of credit history represents 15% of your score. Showing lenders that you have long relationships with other lenders is another way to boost your creditworthiness in their eyes.

Because your credit score takes into account how long your lines of credit have been established, it can make sense to keep lines of credit open. For example, if you have a couple of credit cards and mainly use the newer of those cards, it can still make sense to keep both accounts open. There are, of course, circumstances where this might not make sense, such as if one of the cards charges a steep annual fee.

Limiting Lines of Credit

The rest of your credit score is based on credit mix and new credit, both of which represent 10% of your score. Lenders will look to see if you’re able to juggle a variety of loan products, including credit cards, student loans, and mortgages.

Additionally, lenders will look at what credit accounts you’ve opened recently. People who open multiple lines of credit in a short period of time may be at greater risk of default. Particularly if you’re trying to build your credit score, you may consider limiting the number of new lines of credit you pursue.

Recommended: How to Calculate the APR on a Car Loan

How Does 0% APR Work When Refinancing a Car Loan?

One of the potential drawbacks of 0% APR is that repayment terms tend to be short, often 48 months or less. Monthly payments may be relatively high. If your payments become unmanageable, you may be able to refinance your car loan.

Automakers may use other tactics to entice you to purchase a new vehicle from them, including cash bonuses. You typically can’t take 0% APR and a cash bonus, and if you choose the cash, you may end up with a higher interest rate. If that’s the case, you might consider refinancing to a lower interest rate in the future.

In both situations, however, the downside is that applying for two loans within a relatively short period of time can affect your credit score. This is because each application requires a hard inquiry, which usually causes a temporary dip in a credit score of several points.

Recommended: Can You Remove a Cosigner From a Loan?

The Takeaway

A 0% APR car loan can be a good way for some auto buyers to finance a new vehicle since you don’t get charged interest. However, these offers are typically only available from auto manufacturers or dealers to those with high credit scores, large down payments, and other credentials. One option to this kind of loan is refinancing, or paying off your old loan with a new one that ideally comes with a better interest rate and possibly better terms.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

How can you get 0% APR on your car loan when refinancing?

A 0% APR offer is typically extended when you purchase a new car from a dealer or auto manufacturer. If you’re attempting to refinance an existing auto loan, you likely won’t be able to secure a 0% APR.

What credit score is required to get 0% APR on your car loan?

A credit score of 740 or above is typically required to qualify for 0% APR.

Is a cosigner required to get 0% APR on your car loan?

A cosigner is not required to get a 0% APR when you purchase a new or certified pre-owned vehicle. However, if you don’t qualify for this kind of loan on your own, a cosigner with strong credit could help you secure this kind of deal.

Photo credit: iStock/skynesher

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q325-113

A car title is a key piece of documentation that shows who owns the vehicle as well as identifying information about the vehicle. The title will typically list the lender or lienholder if you’re repaying a car loan. In most states, the title is held by the lienholder until you finish paying off the car loan.

That said, what is a vehicle title, exactly? How do you get one and how much does it cost? What else is important to know about a car title? Learn the answers to these questions and more.

The Purpose of a Car Title

A car title has one purpose: to show who legally owns the vehicle. As such, this document is used to record when ownership is being transferred from one person to the next. A car title typically lists the registered owner of the vehicle and any lienholders with a security interest in the vehicle.

In general, lienholders will not appear on the title if the registered owner has 100% equity. You gain 100% equity in the car when you pay off a car loan or when you buy a new or used car outright.

Recommended: Is an Auto Loan Secured or Unsecured?

Car Title Defined

A car title is an ownership document that contains important information about the vehicle and its owner(s). Either the state Department of Motor Vehicles (DMV) or department of transportation issues it when the car is sold.

What Is Included on a Vehicle Title?

A car title will contain the name of the owner along with other key pieces of information that can vary by state. Here’s some of the information that’s typically found on a car title:

Vehicle Identification Number (VIN)

A car title will usually include a vehicle identification number or VIN, which is typically a 17-digit unique code. Its characters and digits encode key information about the vehicle, such as the country of origin and engine type.

Vehicle Description and Odometer Reading

The automobile title will list identifying information about the vehicle, such as its year, make and model. It may also include the odometer reading, which lists the number of miles it has been driven at the time of titling.

Lienholder Information

Lienholder information will typically appear on the title if you owe money on a secured auto loan. A lienholder is usually a financial institution, and your lienholder may repossess the vehicle if you default on a car loan.

When you pay off your car loan, there would be a change in the type of title you would physically possess, from a lien title to a clear title. (Some states issue electronic or paper titles.)

Recommended: Questions to Ask When Buying a Used Car

Types of Automobile Titles

A car title in some cases can tell you whether the vehicle has a history of being rebuilt or whether a lienholder has a security interest in the vehicle:

•  Clear title: This is a title that has no loan (lien) on it. If you have a clear car title, this means you’re the sole owner, with no other party having any legal claim on the car.

•  Lien title: If you’ve financed a vehicle, then the lender/lienholder has an interest in that vehicle until the loan is paid off. A title with the lienholder’s name on it is a lien title.

•  Clean title: This means that a car has never been in an accident in which it was declared a total loss. This is something you’d want to know if buying a used car.

•  Rebuilt title. This indicates a car that was wrecked to the point of being declared a total loss but was repaired and is now drivable again.

•  Salvage title. These are vehicles that, after a wreck, are considered a total loss. This does not mean that it has no value; rather, the costs to repair it exceed that value.

Recommended: How Does Car Refinancing Work?

How to Get a Car Title

Car titling laws can vary by state. In most states, you’ll generally receive a title when you gain 100% equity in the vehicle. This can happen when you buy a new or used car outright or when you pay off your lienholders in full.

Some states, however, may give car titles to the registered owner even if lienholders have a security interest in the vehicle. Here are the states that may give lien titles to the registered owner:

•  Arizona

•  Kentucky

•  Maryland

•  Michigan

•  Minnesota

•  New York

•  Oklahoma

•  South Dakota

•  Wisconsin

Titles are issued by a state’s Department of Motor Vehicles (DMV) or their department of transportation. If you were to misplace your car’s title, however, rest assured there are ways you can get a replacement car title.

How Much Is a Car Title?

There is typically a title fee when you first purchase a vehicle, with the amount varying by state. Some states charge a fee of $10 or less, while other states may charge a fee of more than $200.

Note that a title fee is different from a registration fee. A title fee is typically a one-time fee, whereas car registration fees typically must be paid annually or biennially as long as you own the vehicle. You can register a car without a driver’s license in all states.

When Is a Car Title Required?

States typically require you to apply for an original title or title transfer within days or weeks of buying a new or used car. Car titles are exchanged when you buy, trade in, or sell a car. If you refinance your vehicle with a lender other than your current one, then the lienholder will change on that title.

Here’s more about each type of transaction when a car title is required.

Title Jumping: Trading, Buying, or Selling a Car

If you decide to trade in your car, you would go to the dealership that has the vehicle you want to buy or lease. Let them know that you’d like to use your current vehicle as a trade-in, and they’ll appraise it and offer you a certain amount of money. Usually, this money goes toward the purchase or lease of your next vehicle. If this process is a go, then you’ll sign the car title over to the dealer, making them its new legal owner.

When selling your vehicle to a private individual (and there is no outstanding loan), you’d sign the title in the correct spot to indicate that you plan to transfer ownership to the buyer. It’s important to sign in the right spot to avoid delays in the transaction.

If you want to sell a car but you have a lien title (indicating that a loan still exists on the vehicle), contact your lender to find out how to handle the process. The loan must be paid off before the title can actually transfer to the new owner.

Recommended: The Most Expensive Car Repairs

Title Transfer

Once a seller has signed off on a clear title to release their ownership (and any additional information required by the state is filled in), then the buyer can take the automobile title to the appropriate state office to have a new title created in their name. If there are two current owners, both will need to sign the title. In some states, this transaction may need to be notarized, so check what your state requires.

If there is a loan on the vehicle, work with your lender to transfer ownership.

Recommended: What Questions to Ask When Refinancing

Title Loan

With a car title loan, you give a lender the vehicle title in exchange for a short-term loan (typically a term of 30 days), usually for a small amount of money. You’d need to pay a fee for this service and, if you can’t pay back the money, the lender can repossess your vehicle. This type of loan can be quite expensive.

Refinancing Your Vehicle

Refinancing your car loan with a new lender will change the lienholder information on your title. If you’re thinking about when to refinance a car, one important thing to do is to find out what loan-to-value ratio (LTV) a lender requires, which compares the amount you’re borrowing to the value of your car.

Some auto refinance lenders may offer an LTV ratio of up to 125%. Refinancing may be right for you if you can secure a lower interest rate, but you may pay more interest over the life of the loan if you refinance with an extended term.

Once you do the math and determine you’re good to go, make sure you’ve read up on the process of how to refinance a vehicle — more specifically, the information to gather before you do so. Proof of car insurance and proof of income is typically required to refinance a car loan. Typically, a new title is issued to reflect the new lienholder.

The Takeaway

A car title demonstrates who legally owns that vehicle and contains important information about the vehicle and its registered owner. There are several types of car titles, including a clear one (where there is no loan) and a lien title (where there is a loan/lien on the vehicle). When you refinance a car loan, a new title is typically issued to reflect the lender’s information.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

What does the title mean for a car?

A car title is a document that confirms you legally own a particular vehicle. It’s typically issued by your state’s department of motor vehicles and includes such information as the vehicle identification number (VIN) and the vehicle’s make, model, year, color, and mileage.

Who holds the title to my car?

If you own your car outright, you hold the title. If you have a loan, your lender likely holds the title until your debt is fully paid off.

How do you get a car title if you lost it?

Most states offer replacements through a local DMV office. You will likely have to provide proof of ownership and pay a fee to obtain the replacement title.

Photo credit: iStock/robertsrob

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOALR-Q325-112

Car depreciation is something you may not think about until it’s time to refinance, sell, or trade in your vehicle. Even once you consider the concept, it can be confusing. What is vehicle depreciation and how does it impact you, as the owner of the car? Do all cars depreciate in the same way?

Car depreciation is the amount of value a vehicle loses due to age, mileage, and other factors. Below we describe how car depreciation works and provide concrete examples of how it happens.

What Is Car Depreciation?

Think about buying a vehicle, whether a new or a used car. You select a car, sign the paperwork, and get the keys. Excited about the purchase, you drive out of the dealer’s parking lot, eager to show the vehicle to friends and family members.

It is exactly at that moment, though, that vehicle depreciation kicks in. Simply put, depreciation is the steady loss in the value of your car, and it can continue throughout the entire time you own it.

This naturally raises questions, including why this happens, how much a car depreciates annually, and what cars depreciate the quickest and the slowest. Given that cars depreciate, how much is yours currently worth? What impact will that have if you’re interested in selling or refinancing the vehicle?

Let’s dig in to answer those questions about depreciation and more.

Recommended: Car Loan Terms Explained

Calculating Depreciation on a Car

Calculating depreciation on a car is relatively simple. The depreciation formula takes the car’s original sales price and compares it with the current appraised value of the vehicle. The below table highlights how this may work in practice:

It’s also worth pointing out that cars on some occasions may appreciate in value, especially during times of high demand and global supply chain bottlenecks.

If the current value of a vehicle is greater than the vehicle’s original sales price, that means the vehicle appreciated in value. Keeping your vehicle in excellent condition and enhancing its features — such as upgrading the tires — may promote an increasing car value.

Recommended: Guide to Selling a Car With a Lien

Why Do Cars Depreciate in Value?

The concept of automobile depreciation is connected to the vehicle’s resale value.

Think of it this way. If you bought a brand new car on the first of the month and tried to sell it back on the 15th of the same month, you likely wouldn’t get the same amount of money that you originally paid for the vehicle. Why? Because you bought a new car and would be selling back a used one. The car’s resale value is less than its original sale value. That’s depreciation.

Secondhand cars are also subject to depreciation, although at a lesser rate.

When you’re focusing specifically on new cars, there’s another reason that they depreciate. Models come out annually, typically with new features and technologies. That means that last year’s model quickly becomes outdated.

Furthermore, for both new and used cars, as more time goes by, more wear and tear occurs, more miles are put on the vehicle, and more maintenance and repairs are needed. All of that leads to even more depreciation.

Recommended: Luxury Cars With the Lowest and Highest Maintenance Costs

How Much Does a Car Depreciate Each Year?

Looking specifically at new car depreciation rates, a study by iSeeCars notes that not all of them depreciate on the same timeline. Sports cars, for example, tend to depreciate more slowly than high-maintenance luxury sedans.

That said, iSeeCars found that the average five-year-old vehicle depreciated by 45.6% in 2025, which is more lost value than in 2023 (38.8%). This makes depreciation the single greatest “cost” of owning a vehicle.

To break it down a little more, a brand new car typically loses between 9% to 11% of its value as soon as it’s driven off the lot. After a year, about 20% of its value is lost to depreciation.

There are, of course, vehicles that depreciate less than the average amount, and an iSeeCars executive analyst advises that if someone plans to sell a car within the first five years of ownership, then picking one that maintains its value (i.e., depreciates less) is a smart financial strategy. It’s also possible that a vehicle may appreciate in value, which occurred during the Covid-19 pandemic when global supply chain bottlenecks gave some used cars greater resale value.

Cars With the Highest and Lowest Rates of Depreciation

When it comes to the lowest rates of depreciation, Kelley Blue Book — a vehicle valuation and research company — has listed these five vehicles as the 2025 Best Resale Value Cars:

•  Honda Civic

•  Honda Accord

•  Chevrolet Corvette

•  Acura Integra

•  Lexus ES

The iSeeCars study lists the following as vehicles with the lowest depreciation:

•  Porsche 911

•  Porsche 718 Cayman

•  Toyota Tacoma

•  Chevrolet Corvette

•  Honda Civic

The cars with the greatest vehicle depreciation in 2025, according to iSeeCars, are as follows:

•  Jaguar I-PACE

•  BMW 7 Series

•  Tesla Model S

•  INFINITI QX80

•  Maserati Ghibli

Recommended: Complete Guide to Car Appraisals

How Does Car Depreciation Impact You?

Having an asset lose value can impact your net worth. Owning a vehicle is owning an asset, and having one of your assets lose value is not beneficial to your personal net worth. Car depreciation impacts you by reducing the value of your motor vehicle.

Car depreciation diminishes the resale value of your vehicle, which lowers the amount of money you may earn from selling your used vehicle. Car depreciation can also lower the amount of money you may borrow from a title loan lender.

What’s Your Car Worth?

Online car valuation resources that take depreciation value of cars into account while estimating what a car is worth include:

•  Kelley Blue Book

•  Edmunds.com

•  Carfax.com

•  Consumer Reports

•  JD Power

Recommended: Paying the Principal on a Car Loan

When Do You Need to Know About Depreciation?

There are a number of scenarios in which depreciation plays a factor:

When You Want to Trade In a Car

When you’re planning to trade in a car to help finance another vehicle, the dealership will make an offer that takes into account your trade-in’s depreciation. Since offers can vary by dealership, it’s a good idea to compare several before making a decision.

When You Want to Refinance an Auto Loan

A vehicle’s value also comes into play when you’re refinancing an auto loan. Lenders will look at the loan to value (LTV) ratio associated with your vehicle when they review the refinance application. LTV is the total dollar value of the loan (in this case, the refinance loan) divided by the vehicle’s actual cash value.

If, for example, someone wants to refinance a vehicle with a loan amount of $8,000 and it’s worth $10,000, then that vehicle has an 80% LTV. If a financial institution would loan up to 80% on a car refinance, then this vehicle and loan would fall within those parameters. If the loan amount was $9,000, however, that would be an LTV of 90%, which doesn’t fit within what our theoretical financial institution would refinance.

Also pay attention to the car loan interest rates being offered on refinances, as well as the annual percentage rates (APRs). Other issues to compare include loan repayment terms, loan fees such as origination fees and any prepayment penalties, and any closing costs.

Recommended: Can You Refinance a Car Loan With Bad Credit?

Is it Possible to Reduce Car Depreciation?

Yes, it’s possible to reduce car depreciation by keeping your vehicle in excellent condition. Driving less may also reduce the rate of depreciation by minimizing the mileage clocked on your odometer. Keeping your vehicle clean and well-maintained can reduce car depreciation, whereas poor maintenance can bolster the rate of depreciation.

Recommended: How to Increase the Value of Your Car

The Takeaway

Cars depreciate from the moment they’re driven off the dealer’s lot, but depreciation occurs more quickly with some vehicles than others. For example, new car depreciation takes place more quickly than depreciation on used ones, and luxury sedans lose value more quickly than sports cars.

There are easy ways to get a general value of your vehicle that takes car depreciation rates into account. This becomes important when you’re selling or refinancing the vehicle.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

At what age does a vehicle depreciate the most?

Vehicles generally depreciate the most in their first 12 months of ownership. A brand new car typically loses between 9% to 11% of its value as soon as it’s driven off the lot. After a year, about 20% of its value is lost to depreciation.

Should I sell my car before it depreciates?

Selling your car before it significantly depreciates can help maximize its resale value. Cars typically experience the steepest depreciation in the first few years, so timing the sale just before major value drops — such as reaching a higher mileage bracket — can minimize losses and ensure better returns.

Do some cars depreciate faster than others?

Yes, some cars may depreciate faster than other cars. A new car may depreciate faster than a used car, and luxury cars may depreciate faster than sports cars. A car with poor fuel economy may depreciate faster than a car with excellent fuel economy.

Photo credit: iStock/igoriss

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Most cars come with air conditioning as a standard part of the trim package. Car A/C systems can be relatively expensive, as they have to be capable of cooling your car from relatively high temperatures in a short period of time. One critical, and particularly pricey, component of the A/C system is the A/C compressor. The average cost of replacing an A/C compressor is currently $1,000 to $2,000.

Here’s a look at what you need to know about A/C compressors and the factors that affect replacement cost.

Car A/C Compressor Overview

Your car’s A/C system works by manipulating a chemical refrigerant between a liquid and gaseous state. This is done through the control of temperature and pressure. During that process, the A/C system absorbs heat and humidity, which allows the system to pump cool, dry air in your vehicle.

The A/C compressor is located at the front of the engine and is powered by the serpentine belt. It takes in low-pressure gas and compresses it to high-pressure gas, which is also a higher temperature.

From there, the gas is sent to the condenser where it is cooled and changes to a high-pressure liquid. There, forced air is used to transfer heat away from the system.

The A/C compressor has a number of parts that can fail. One is the compressor clutch, which engages or disengages to turn the compressor on or off. Other parts that can fail include bearings within the clutch, the seal within the A/C compressor, and finally, general wear and tear which can lead to additional mechanical parts failing.

If your A/C is no longer working and only blowing hot air, it could be a sign that your A/C compressor needs to be replaced.

Cost of Replacing an A/C Compressor

The cost of replacing an A/C compressor typically ranges from $1,000 to $2,000. Cost will depend in part on whether you replace your failing compressor with a part of a remanufactured compressor or if you replace it with a brand new one.

A remanufactured compressor is a used part that’s been taken apart, thoroughly cleaned and repaired, and put back together. This option may save you money on replacement costs, but it may not last as long as a new compressor would.

You may only want to consider a remanufactured compressor as a short-term option or if you don’t plan to drive your car for much longer.

Your A/C compressor clutch can potentially be replaced on its own, but in many cases, it’s more cost effective to replace the entire unit.

Factors That Affect New A/C Compressor Replacement Cost

Other factors also play a role in replacement costs, including the make and model of your car and labor costs.

Make and Model of Car

If you have a common and affordable vehicle, your costs could be lower since the replacement part is likely to be more readily available. However, if you have an uncommon make or a luxury vehicle, it may be more expensive to replace your A/C compressor.

Labor Costs

The cost of hiring a mechanic typically adds $200 to $300 or more to the price of A/C compressor replacement. Consider that if you’re mechanically inclined, doing the project yourself could save you hundreds of dollars.

If you’re not confident in your ability to make auto repairs yourself, take your car to a trusted auto shop.

Additional Repairs Needed

If your A/C compressor is failing, it’s possible that other parts of your A/C may be in need of repair, as well. Additional repairs may include the condenser, the dryer, the metering device, and the evaporator. Each part could tack on a substantial sum to your final bill. For example, replacing the evaporator could cost $700 to $1,200 or more.

What Impacts a Car’s A/C Compressor’s Performance?

How much you use your A/C could have an impact on its long-term performance due to wear and tear.

There is no maintenance that you can perform that will make your A/C compressor last longer. However, it is driven by the serpentine belt, so make sure that it is installed properly so the parts that run off it can continue to run smoothly.

How Do You Know It’s Time to Replace Your A/C Compressor?

The most common symptom of a failing A/C compressor is that your A/C won’t deliver cold air. Other signs it’s time to replace your A/C compressor include being unable to turn your A/C off, your check engine light coming on, or hearing a screeching sound coming from the belt.

Recommended: Costs to Repair a Catalytic Converter

Where Can I Get My Car’s A/C Compressor Replaced or Repaired?

You can get your A/C compressor replaced or repaired at your car’s dealership or at a local auto shop. If your car is still under warranty, take it to the dealership to have the compressor replaced.

However, if you are no longer under warranty, taking your car to the dealership may be more expensive than using a trusted mechanic at a local garage.

Can You Replace Your Own A/C Compressor?

Yes, you can replace your own A/C compressor. However, doing so will require familiarity with the inner workings of your car and mechanical ability. If these aren’t words you’d use to describe yourself, you may want to take your car to an auto shop to ensure your replacement parts are properly installed.

Can You Drive With a Broken A/C Compressor?

It is not recommended to drive with a broken A/C compressor. In most cars, the A/C compressor is run by the serpentine belt. If it’s not working properly, the belt may not be able to spin as it is supposed to. The belt drives other important components of your engine, so if it can’t spin properly, you must have it fixed.

Recommended: Financing a Used Car With Over 100,000 Miles

Financing a New A/C Compressor

If you’re looking for room in your budget to cover this cost, consider refinancing your car loan. When you refinance, you pay off your old loan with a new one — hopefully one with a lower interest rate or perhaps with more favorable terms. You can put that interest rate savings toward car repair.

You could also increase your loan term, reducing your monthly payment. However, when you do so, you increase the number of months you’ll be paying interest, which can increase the overall cost of your loan.

And finally, you could consider a cash-out auto refinance, which gives you cash back from the loan. This money can then be used to pay for a new A/C compressor.

Recommended: Guide to Car Depreciation

The Takeaway

The A/C compressor is a critical component of your car’s A/C system. When it fails, your A/C won’t work, and unfortunately, the serpentine belt that drives other components of the engine may not run as it is supposed to. Fixing your A/C compressor can be a major hit to your wallet, costing as much as $2,000 or more. To pay for this kind of work if you don’t have enough in savings, you might consider refinancing your auto loan.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

Is it worth it to repair your car’s A/C compressor, or should you replace it?

You could potentially fix your A/C compressor, but the cost of repair may be relatively high, making replacement a better long-term solution.

How long do A/C compressors last?

Your A/C compressor only needs to be replaced when it fails, and it should last 150,000 to 200,000 miles.

Is an A/C condenser and an A/C compressor the same thing?

The A/C compressor is not the same as the A/C condenser. The compressor compresses the refrigerant into a high-pressure, high-temperature gas, while the condenser allows the gas to cool and turn into a liquid.

Photo credit: iStock/Bohdan Bevz

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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