Car Depreciation Calculator

How it works

A car loses value each year by a percentage of what it was worth at the start of that year, so the losses shrink in dollars even when the rate stays the same. The value after several years is the price multiplied by (1 − rate) once for each year.

The default curve is a common rule of thumb: about 20% in the first year, about 15% a year in years two and three, and about 12% a year after that. These are typical figures, not data for any model. Wikipedia's Car costs article puts average depreciation at "around 15–20% per year" and notes that "depending on market conditions, cars may depreciate 10–30% the first year". Edit the rates, or switch to a single annual rate, to match what you see for your model in pricing guides or listings.

The table shows each year's rate, the dollars lost that year, the value at the end of the year, the running total loss and the share of the price that remains.

Formula

value after year t = price × (1 − r₁) × (1 − r₂) × … × (1 − r_t)
curve:    r₁ = year 1 rate;  r₂ = r₃ = years 2–3 rate;  r₄, r₅, … = year 4 on rate
constant: value after year t = price × (1 − r)^t
loss in year t = value after year t − 1 × r_t;   total loss = Σ losses = price − value
share lost = total loss ÷ price;  average loss per year = total loss ÷ years

Example

A $40,000 car on the default curve is worth $40,000 × 0.80 = $32,000 after one year, $32,000 × 0.85 = $27,200 after two, $23,120 after three, $20,345.60 after four and $17,904.13 after five. The total loss over five years is $22,095.87, 55.24% of the price, or $4,419.17 a year on average.

At one rate of 15% a year instead, the same car is worth $40,000 × 0.85⁵ = $17,748.21 after five years, a loss of $22,251.79.

Assumptions and limitations

• The rates are figures you enter. The defaults are a typical rule of thumb, not a forecast: actual values depend on the make and model, mileage, condition, options, region and the used-car market at the time, which has at times pushed values up rather than down.
• Each year's rate applies to the value at the start of that year (declining balance). Values are shown at whole years only.
• The purchase price is the starting value. Taxes and fees paid at purchase are not part of what the car can be sold for, so including them in the price overstates the resale value.
• This is an estimate, not an appraisal and not financial advice. A dealer offer, a private sale or a pricing guide for your exact vehicle is what sets its actual value.

Frequently asked questions