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Car Depreciation Calculator

By · Updated

Enter your vehicle's price and an assumed annual depreciation rate to project its resale value year by year.

Car Depreciation Calculator

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Estimated value after 5 years
$17,748.21
Total value lost
$22,251.79 (55.6%)
Uses a simplified constant-percentage model. Real-world depreciation is typically front-loaded - steeper in year 1 (often 16-30% across studies), then slower in later years - so this projection is a simplification, not a precise forecast for any specific make and model.

The formula

Value after year N = Purchase price x (1 - annual rate)^N This is a constant-percentage (declining balance) model - a simplification of real-world depreciation, which is typically steeper in year 1 and slower afterward
Example

A $40,000 vehicle at a 15% assumed annual rate: worth about $34,000 after year 1, and roughly $17,748 after 5 years - a cumulative loss of about 55.6%.

Step-by-step guide

  1. Enter the purchase price - use the actual price paid, not MSRP, for the most accurate starting point.
  2. Choose an annual depreciation rate - published studies put average first-year loss between roughly 16-30% and average 5-year cumulative loss around 42-46%, but rates vary significantly by make, model, and market conditions.
  3. Read the year-by-year value table to see the projected resale value at any point in ownership.

Why real depreciation doesn't follow a perfectly smooth curve

This calculator uses a constant percentage each year for simplicity, but actual vehicle depreciation is typically front-loaded - the steepest drop happens the moment a new car is driven off the lot and through the first year, then the annual percentage loss gradually moderates in later years. This is why published studies often report a higher first-year rate (commonly cited in the 16-30% range depending on the study and vehicle mix) alongside a lower average annual rate over 5 years. Vehicle-specific factors matter enormously too: reliable, in-demand models from brands like Toyota and Honda often lose value far more slowly than luxury vehicles or electric vehicles facing rapid technology turnover, so the SAME dollar price new can result in very different resale values a few years later.

Common mistakes

Applying the same depreciation rate to every make and model - actual rates vary dramatically, from vehicles that hold over 80% of value after 5 years to some that retain barely 25%, so a single generic rate is only a rough starting point.
Ignoring mileage and condition - two identical models with very different mileage or accident history can have meaningfully different resale values, something a simple age-based projection can't capture.

Frequently asked questions

Why is a car's first year of depreciation usually the steepest?

A new car immediately loses its "new car" status the moment it's registered and driven, shifting it into the much larger used-car market where buyers expect a discount versus paying full retail for something never-titled - this instant status change accounts for much of the steep initial drop.

Do all vehicle types depreciate at similar rates?

No - compact and midsize cars from reliability-focused brands often depreciate slower, trucks tend to hold value well due to steady demand, while luxury vehicles and many electric vehicles have historically depreciated faster, sometimes losing 60-75% of their value within 5 years.

Does a branded (salvage or rebuilt) title affect depreciation?

Yes, significantly - a salvage or rebuilt title typically knocks a substantial additional percentage off a vehicle's value compared to an identical clean-title vehicle of the same age and condition, on top of normal depreciation.

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