Car Depreciation Calculator
Estimate how much your car will be worth after a few years of ownership. Enter the purchase price, age, years to own, annual mileage and a depreciation profile to see the year-by-year value drop.
Estimate How Your Car's Value Drops Each Year
Car Depreciation Formula
Where:
- \(V_n\) — estimated value of the car after \(n\) years of ownership
- \(P\) — purchase price (with taxes and fees)
- \(r_1\) — depreciation rate in the car's first year of life (applies only if it was bought new)
- \(r\) — depreciation rate for every later year, adjusted for mileage
- \(n\) — number of years of ownership
The mileage adjustment adds penalty points to the yearly rate: every 1,000 miles per year above 12,000 adds 0.5 percentage points, capped at 20 points.
\[ r = r_{\text{base}} + 0.5 \cdot \min\left(20, \max\left(0, \frac{M - 12{,}000}{1{,}000}\right)\right) \]
This is a percentage-of-value (declining-balance) model: each year the car loses the same percentage of its remaining value, so the dollar losses shrink over time — but the first year of a new car's life is steeper than all later years.
Car Depreciation – Calculation Example
Example: you buy a brand-new car for $30,000, drive it 12,000 miles per year (the baseline, so no mileage penalty), and plan to keep it for 5 years. Using the average-car profile: 20% in the first year, then 15% per year.
\[ V_1 = 30{,}000 \times (1 - 0.20) = 24{,}000 \]
\[ V_5 = 30{,}000 \times 0.20^{0} \times 0.85^{4} \cdot 0.8 = 24{,}000 \times 0.85^{4} \approx 12{,}528.15 \]
\[ D_{\text{total}} = 30{,}000 - 12{,}528.15 = 17{,}471.85 \quad (58.24\%) \]
Result: the car is worth about $12,528 after 5 years. Total depreciation is $17,471.85, or 58.24% of the purchase price — an average loss of $3,494.37 per year, or about $0.29 per mile driven (60,000 miles total).
How to use the calculator
- Enter the Purchase price — the full amount you paid, including taxes and fees.
- Set Age at purchase to 0 for a brand-new car; enter the vehicle's age in whole years if you bought it used. The steep first-year rate only applies when the car is new.
- Enter the number of Years to own (1–15).
- Enter your Annual mileage. Up to 12,000 miles per year changes nothing; above that, 0.5 percentage points are added to each year's depreciation rate per extra 1,000 miles.
- Choose a Depreciation profile: average car, luxury car, truck/SUV, or custom rates. If you pick custom, two extra fields appear for the first-year and yearly percentages.
- Read the results: the value after ownership, total depreciation in dollars and percent, average yearly loss, cost per mile, plus a year-by-year table and a bar chart of the value over time.
What car depreciation is and why it matters
Depreciation is the decline in a vehicle's market value over time. It is usually the single largest cost of car ownership — often bigger than fuel, insurance and maintenance combined over the first few years. A car that loses 20% of its value in year one has effectively cost you that money the moment you drive it off the lot, even before you account for anything else.
The loss is not evenly spread. A new car takes its biggest hit in the first year of life, because a used "one-year-old car" is worth noticeably less than a new one with the same equipment. After that, values decline more gently: each year the car loses a percentage of what it is still worth, so the dollar amount lost each year shrinks even though the percentage stays the same. In the example above, the car loses $6,000 in year one but only about $2,211 in year five.
Mileage matters too. Odometer reading is one of the first things buyers check, and cars with above-average mileage command lower prices. This calculator adds a penalty of 0.5 percentage points to the yearly rate for every 1,000 miles per year above the 12,000-mile baseline, up to a maximum of 20 points.
When comparing the results, focus on the breakdown, not just the final number. The year-by-year table shows when the losses happen, which helps you decide whether keeping the car an extra year makes sense — after the steep early years, each additional year costs less in depreciation. The cost per mile figure is useful for comparing depreciation with your running costs, such as the results from our fuel cost calculator or your car's gas mileage.
Depreciation profiles
| Profile | First year of life | Later years |
|---|---|---|
| Average car | 20% | 15% per year |
| Luxury car | 25% | 20% per year |
| Truck / SUV | 15% | 12% per year |
Luxury vehicles tend to depreciate fastest because their new price includes a brand premium that fades in the used market. Trucks and body-on-frame SUVs hold value best, thanks to durable reputations and steady demand. Use the Custom rates option if you know the historical depreciation of a specific model.
Assumptions, limitations and tips
- It's an estimate, not a quote. Real resale values depend on brand reputation, trim, options, color, condition, accident history, fuel prices and local demand. Treat the output as a typical pattern for the chosen profile.
- Straight percentages, smooth decline. The model assumes a steady percentage loss each year. Real markets have jumps — a redesign, a spike in used-car demand or a recall can move a car's value suddenly in either direction.
- Buying used dodges the biggest hit. Because the steepest rate applies only to a car's first year of life, a one- or two-year-old car has already absorbed the largest single loss. Set "Age at purchase" to 1 or 2 to see how much you save.
- Low mileage protects value. Keeping annual mileage under 12,000 avoids the mileage penalty entirely, on top of the natural benefit of a lower odometer reading.
- Depreciation is only one cost. To judge whether a car fits your budget overall, pair this result with our car affordability calculator or the car lease payment calculator, since lease payments are also driven by predicted depreciation.
Frequently Asked Questions
How do I calculate car depreciation by hand?
Take the purchase price and multiply it year by year. For a new car, first multiply by \((1 - r_1/100)\) using the first-year rate, then multiply by \((1 - r/100)\) for each later year. For example, a $25,000 new car at 20% then 15%/yr is worth \(25{,}000 \times 0.80 = 20{,}000\) after year one, then \(20{,}000 \times 0.85\) after year two, and so on. Subtract the final value from the price to get total depreciation.
What is a normal car depreciation rate per year?
Most cars lose about 15–20% of their value in the first year and roughly 10–15% per year after that. A common rule of thumb is the "50% in 5 years" idea: an average vehicle is worth around half its original price after five years. Trucks and some SUVs do better (often retaining 55–65% after 5 years), while luxury brands often fall faster due to fading brand premiums.
At what age is a car fully depreciated, and what is the floor value?
Percentage models never reach zero, but in practice most cars level off at a scrap or parts value — often $1,000–$3,000 — once they are 15–20 years old. After about year 8–10, the yearly percentage loss slows and condition, mileage and maintenance history matter far more than age. This calculator caps ownership at 15 years, where the model starts to overstate losses for well-kept vehicles.
Does high mileage really lower a car's value that much?
Yes — odometer reading is often the first filter buyers use. Cars above roughly 12,000–15,000 miles per year typically sell for noticeably less than average-mileage examples of the same model. This calculator adds 0.5 percentage points to each year's depreciation rate for every 1,000 miles per year above the 12,000-mile baseline, capped at 20 points, so driving 32,000 miles a year is treated much more harshly than the average.
How much value does a new car lose the moment I drive it off the lot?
Instant "lot depreciation" is often estimated at 5–10%, because a once-sold new car can no longer be sold as new. The market prices it against other used cars instead. This calculator's steeper first-year rate (e.g., 20% for an average car) captures the total first-year drop, which includes that instant hit plus the rest of the year's decline.
Is it better to buy a one- or two-year-old used car to avoid depreciation?
Usually, yes. Because the steepest loss happens in a car's first year of life, a one-year-old car has already absorbed the biggest single hit, but still has most of its useful life left. Some shoppers prefer 2–3-year-old cars that are off-lease with full service records. Set "Age at purchase" to 1 or 2 in the calculator to compare the numbers directly, and always factor in the remaining warranty and the used car's condition.
Can I use this calculator with other currencies or kilometers instead of miles?
Yes. The price can be in any currency — dollars, euros, pounds — since depreciation is a pure percentage of what you paid. For metric users, convert your annual mileage: 12,000 miles ≈ 19,300 km is the baseline, and roughly 1,600 km above it adds 0.5 percentage points to the yearly rate. The results will be shown in the same currency units as your input price.