About the Car Depreciation Calculator
This car depreciation calculator projects how much a vehicle is worth over time using two rates: a steeper loss in the first year, when a new car stops being new, and a steady yearly rate after that. Enter the purchase price, both rates and how many years ahead you want to look, and you get the value at each year, the total amount lost and the average depreciation cost per year.
Depreciation is often the largest single cost of owning a newer car, yet it never shows up on a bill. Use this tool when deciding between new and used, choosing how long to keep a car, estimating trade-in value, or checking whether a loan will leave you owing more than the car is worth.
Defaults of 20% in year one and 15% per year afterwards are common rule-of-thumb figures for a mainstream new car. Real results vary widely by make, model, mileage, condition and market conditions, so adjust the rates using listings for similar used cars.
With the default inputs, the value at end of period is $6,485.27. Change any value above to recalculate instantly.
How to use the car depreciation calculator
- 1Enter what you paid (or will pay) for the car.
- 2Set the first-year depreciation — around 20% for a typical new car, lower for a used one.
- 3Set the yearly rate afterwards; 10–15% is a common range.
- 4Choose how many years to project and review the chart and table.
Formula and method
The calculator uses declining-balance depreciation: the car loses a fixed percentage of its remaining value each year, so the dollar loss shrinks over time even though the rate stays the same. Year one uses its own, usually higher, rate d₁ because a car loses a large chunk of value as soon as it is registered and driven.
Total depreciation is the purchase price minus the value at the end of the period, and the average per year divides that by the number of years. This is an estimate of market value, not tax depreciation (MACRS), which follows IRS schedules.
- V(t)
- Estimated value after t years
- P
- Purchase price
- d₁
- First-year depreciation rate
- d
- Yearly depreciation rate after year one
Worked examples
$35,000 new car over 10 years
Losing 20% in year one leaves $28,000. After that 15% a year takes it to about $14,616 after 5 years and $6,485 after 10 — a total loss of $28,515, or about $2,851 per year.
$50,000 luxury car kept 5 years
Faster-depreciating luxury models might lose 25% in year one and 18% a year after. The car is worth about $16,955 after 5 years, meaning roughly $6,609 of value disappears each year.
Pickup that holds its value, 3 years
With 12% then 10% a year, a $28,000 truck is worth $24,640 after a year and about $19,958 after three — it keeps over 71% of its value.
Frequently asked questions
How much does a new car depreciate in the first year?+
A common rule of thumb is around 20% in the first year, with some models losing more and popular trucks and SUVs losing less. The exact figure depends on the brand, demand for the model, mileage and incentives on new versions.
Which cars depreciate the slowest?+
Vehicles with strong reliability reputations and steady used-market demand, such as many pickups, some SUVs and certain sports cars, tend to hold value best. Luxury sedans and models with heavy new-car discounts often depreciate fastest.
Does mileage affect depreciation?+
Yes. Values are usually quoted for average mileage of roughly 12,000–15,000 miles a year; higher mileage lowers value and lower mileage raises it. Condition, accident history and service records matter too.
Is buying a used car a way to avoid depreciation?+
Buying a car that is two or three years old lets the first owner absorb the steepest drop, so your yearly depreciation is usually lower. You still lose value each year, just more slowly in dollar terms.
Is this the same as depreciation for taxes?+
No. This estimates market value. Business vehicle deductions follow IRS rules such as MACRS and annual limits for passenger autos, which produce different numbers.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.