Car Depreciation Calculator

How fast your car loses value.

How to use this calculator

Enter what you paid (or plan to pay), how long you'll own it, and a depreciation rate. A common rule of thumb is about 15-20% per year, with the biggest single drop in the first year.

What the result means

Depreciation is usually the largest ownership cost - bigger than fuel or insurance. This estimate helps you compare a new car (which drops fast) against a used car (which has already taken the hit).

How depreciation is estimated

The calculator compounds an annual depreciation rate on the purchase price. After each year the car is worth (1 - rate) of what it was the year before. A 15% annual rate means a $35,000 car is worth about $17,500 after five years - a $17,500 loss.

Real-world rates

• New cars lose roughly 20% in the first year, then settle to about 10-15% a year.
• Reliable mass-market sedans and trucks hold value better than luxury or niche models.
• High mileage, accidents and missing service history all speed up the loss.

Because the first year is the steepest, the tool underestimates a new car's early drop if you use one flat rate. To model it more precisely, run year one at 20% and the rest at 10-12%.

Why depreciation is the biggest car cost

Most owners fixate on fuel and insurance, but for a new car depreciation is usually the single largest expense - more than gas, maintenance and insurance combined in the first few years. That is the real reason a 2-3 year old used car is cheaper to own.

Frequently asked questions

Should I use a higher rate the first year?

Real data shows new cars lose about 20% in year one, then ~10-15% after. If you want to model that, run year one separately with a higher rate.

What resale value should I use in planning?

Plug in your purchase price, your expected holding period and 15% a year. Then subtract a little more if the car is an EV or a luxury model, both of which depreciate faster in year one.

Turning depreciation into a decision

Compare the five-year depreciation of the car you want against a two- or three-year-old example of the same model. The used one already absorbed the steepest drop, so its future loss is smaller. For EVs and luxury brands, add a couple of points to the rate - their first-year resale losses tend to be sharper.