Car Depreciation Calculator
Estimate your car's future value using a declining-balance depreciation rate, with total value lost and annual loss.
How to use this tool
- Enter the car's purchase price.
- Enter an annual depreciation rate (15-20% is typical).
- Enter how many years you'll own it.
- Read the projected future value and total value lost.
- Compare models by depreciation, not just sticker price.
A new car can lose nearly half its value in five years. Enter your price, an annual depreciation rate, and a time horizon to see the future value, total loss, and how much value remains.
Formula
Cars lose value on a declining-balance basis — a fixed percentage of whatever they're worth each year:
Future value = Price × (1 − Rate%)Years
Total loss = Price − Future value
Average annual loss = Total loss ÷ Years
Value remaining = Future value ÷ Price × 100
How it works
Depreciation is the largest cost of owning a newer car, yet it never shows up on a bill. This calculator models it with the declining-balance method: the car loses the same percentage of its current value each year, so the dollar loss is steepest early and tapers off as the car ages. That matches real-world data, where a new car often sheds 20% in year one and roughly 15% a year thereafter.
Enter a single blended rate that reflects your vehicle. Luxury cars and EVs with fast-improving tech tend to depreciate faster; trucks, off-road SUVs, and a few reliable models hold value better. The result is an estimate, not a quote — actual resale depends on mileage, condition, trim, color, and market timing.
Use the output two ways: to judge how much a car will be 'worth' when you plan to sell, and to compare models by their depreciation cost rather than just sticker price. A cheaper car that depreciates faster can cost more to own than a pricier one that holds its value. The reference table shows a typical $35,000 car's trajectory.
Worked example
$35,000 car at 15%/yr for 5 years
- Retention factor = (1 − 15%) = 0.85 per year.
- After 5 years: 0.855 = 0.443705.
- Future value = $35,000 × 0.443705 = $15,529.69.
- Total loss = $35,000 − $15,529.69 = $19,470.31.
- Average annual loss = $19,470.31 ÷ 5 = $3,894.06; value remaining = 44.37%.
Value after 5 years $15,529.69 | Total loss $19,470.31 | Avg annual loss $3,894.06 | 44.37% remaining
Common mistakes to avoid
- Applying a flat 20% annual rate to every vehicle -- luxury brands and EVs often depreciate faster (25-30%) while trucks and some SUVs depreciate more slowly.
- Confusing the annual depreciation rate with the total percentage lost over the full period; at 15% per year for 5 years the car retains about 44% of value, not 25%.
- Using MSRP instead of the actual purchase price (after discounts and incentives) as the starting value for the depreciation model.
Value of a $35,000 car at 15%/yr depreciation
| Year | Value | Total lost | Lost % |
|---|---|---|---|
| 0 | $35,000 | $0 | 0% |
| 1 | $29,750 | $5,250 | 15% |
| 2 | $25,287 | $9,713 | 28% |
| 3 | $21,494 | $13,506 | 39% |
| 5 | $15,530 | $19,470 | 56% |
| 7 | $11,220 | $23,780 | 68% |
| 10 | $6,891 | $28,109 | 80% |
Key terms
- Depreciation
- The decline in a car's market value over time, driven by age, mileage, wear, and demand.
- Declining-balance method
- A model where the asset loses a fixed percentage of its remaining value each period, so dollar losses shrink over time.
- Residual / resale value
- What the car is worth at a future point — the future value this calculator estimates.
- Depreciation curve
- The shape of value loss over time: steep in the first year, then flattening as the car ages.
Frequently asked questions
- How much does a car depreciate per year?
- A typical new car loses about 20% of its value in the first year and roughly 15% a year after that, leaving it worth around 40% of its original price after five years. Rates vary widely by make and model.
- Which cars hold their value best?
- Trucks, certain SUVs, and a handful of famously reliable models depreciate slowest. Luxury cars, EVs with rapidly improving tech, and models with heavy incentives tend to depreciate fastest.
- Does mileage affect depreciation?
- Yes. Higher-than-average mileage accelerates value loss, while low mileage and good condition slow it. This calculator uses a single blended annual rate; adjust it up for heavy driving.