Loans
Car Depreciation Calculator
A car is a depreciating asset — it loses value every year, fastest at the start. Enter the price and an annual depreciation rate to project the car's value over time and see how much of your purchase the loss in value costs you.
Formula shown below · Tested against worked examplesHow we verify
New cars often lose ~20% the first year and ~15%/yr after; varies widely by model.
Estimated value: $13,311
Estimated value
$13,311
After 5 years.
- Value lost
- $16,689
- Share of value kept
- 44.37%
- You paid
- $30,000
Value by year
| Year | Value |
|---|---|
| 1 | $25,500 |
| 2 | $21,675 |
| 3 | $18,424 |
| 4 | $15,660 |
| 5 | $13,311 |
Compare scenariosTry three values of one input
| Purchase price | |||
|---|---|---|---|
| Estimated value | $11,980 | $13,311+$1,331 | $14,642+$2,662 |
| Value lost | $15,020 | $16,689+$1,669 | $18,358+$3,338 |
| Share of value kept | 44.37% | 44.37%+0% | 44.37%+0% |
| You paid | $27,000 | $30,000+$3,000 | $33,000+$6,000 |
Every other input stays at the value you set above — currently $30,000 for purchase price. Differences are measured against the first column.
Saved scenariosSave this calculation
Saved in this browser only — no account, and nothing is sent to us. Clearing your browser data deletes them.
How this calculator works
Value each year = purchase price × (1 − depreciation rate)^year, a standard declining-balance model. Value lost is the price minus the final value; share kept is final value ÷ price.
A single constant rate is a simplification — real depreciation is steepest in year one and varies by make, model, mileage, condition, and market. Use it as an estimate and check model-specific resale data for a specific car.
Formula
Value after n years = P × (1 − d)ⁿ- P
- Purchase price
- d
- Annual depreciation rate, as a decimal
- n
- Years owned
A declining-balance model: each year's loss is a percentage of the remaining value, not of the original price. Real depreciation is steepest in year one and varies far more by make and model than by any input here.
What this assumes
- A declining-balance model at the rate you enter. Real depreciation is steepest in year one and varies enormously by make and model.
- Condition, mileage and accident history are excluded and can dominate the actual resale value.
- Market shocks are not modelled — used values have moved sharply in both directions in recent years.
What changes this number
- The first year
- Typically the steepest single drop, and the reason buying a one-year-old car is a durable piece of advice.
- Make and model
- The spread between the best and worst retained value is far wider than any other input here.
- Mileage
- Drives value down independently of age, which is why a low-mileage older car can be worth more than a high-mileage newer one.
A worked example
Take the $30k at 15%/yr, 5 years scenario. These figures are produced by the calculator above, not written alongside it, so they always match what the tool returns.
What you enter
- Purchase price
- $30,000
- Annual depreciation rate
- 15%
- Years to project
- 5 years
What it returns
- Estimated value
- $13,311
- Value lost
- $16,689
- Share of value kept
- 44.37%
- You paid
- $30,000
Sources
This calculator uses no external data — the result follows entirely from the formula above and the values you enter, so there is nothing to cite beyond the arithmetic.
Calculator last reviewed August 9, 2026. How we verify
Try an example
Frequently asked questions
How fast does a car depreciate?
A typical new car loses around 20% of its value in the first year and roughly 15% a year after that, so it can be worth about half its price after five years. Rates vary widely — luxury cars and EVs often depreciate faster, while some trucks and reliable models hold value better.
Why do new cars lose value so fast?
The steepest drop happens the moment you drive off the lot, because the car instantly becomes 'used' and loses the new-car premium. Depreciation then slows each year as the remaining value shrinks. This front-loaded curve is why buying a 2–3 year old car can be much cheaper than buying new.
How can I reduce depreciation's cost?
Buy models known to hold value, keep mileage moderate, maintain the car well, and keep it longer so you spread the loss over more years. Buying slightly used lets someone else absorb the worst first-year drop. Depreciation is usually the single biggest cost of car ownership — bigger than fuel or repairs.
Does depreciation matter if I'm not selling?
Yes — it's a real cost even if you keep the car, because it's wealth tied up in an asset that's steadily shrinking. It also affects your insurance payout if the car is totaled and how much equity you have if you still owe on a loan. Being 'underwater' happens when the loan balance exceeds the depreciated value.
This calculator helps answer
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Disclaimer: DayCents provides this calculator for educational purposes only. Results are estimates based on your inputs and the stated assumptions — they are not financial advice, a quote, or an offer of credit. Consult a qualified financial professional before making major money decisions.