Drivers looking to buy a used car can use a simple '1-3-5 rule' to estimate how quickly a vehicle may lose value, helping them secure the best deal. The advice comes as figures show approximately 7.81 million used cars were sold in 2025, making the secondhand market nearly four times the size of the new car market.
What is the 1-3-5 rule?
Sean Wright, vehicle specialist at broken car buyer Sell Your Problem Car, explains that the rule involves comparing asking prices for one-year-old, three-year-old, and five-year-old versions of the same car. This comparison shows where the steepest losses occur, whether most of the depreciation has already passed, and how much a buyer could lose when they later sell.
To apply the rule, start by searching for one-year-old, three-year-old, and five-year-old versions of the same make, model, and trim. Compare several adverts at each age, keeping mileage, condition, engine, gearbox, and equipment as close as possible. If the price falls sharply between years one and three, but changes far less between years three and five, that suggests the steepest depreciation has already happened.
How to check the cost
Look at several adverts for each age group, then use the middle of the price range rather than the cheapest or most expensive example. This gives a clearer view of what buyers are currently being asked to pay.
The largest price gap between years one, three, and five shows when the car is losing value fastest. Most cars experience their steepest fall during the first three years, with the first year often bringing the largest drop. A new car may lose between 15% and 35% in its first year, while the rate usually slows as the vehicle gets older.
What the result tells buyers
If values continue to fall heavily between years three and five, buyers should expect a lower resale price when they eventually sell. If the decline slows after year three, buying at that point may mean much of the early depreciation has already been absorbed by the previous owner. For many motorists, a car aged between three and five years can offer a better balance between purchase price, condition, and future resale value.
If it seems too good to be true
Wright also warns that a steep fall in price may show that used buyers are concerned about servicing, fuel, insurance, tax, or repair costs. A car can look like a bargain because its purchase price has dropped quickly, but those savings may be reduced by higher ownership costs. The test should therefore be used alongside checks on service history, warranty cover, and likely running costs.
He adds that buyers often focus on the amount they pay at the dealership, but the amount lost when the car is later sold can have a much larger effect on the overall cost. A few minutes spent checking the same vehicle at different ages could help buyers avoid purchasing just before another sharp fall in value.
