Car Depreciation Calculator
Project your vehicle's value year by year.
Reviewed by the Calculation Machine team · Updated 24 October 2026 · How we check our maths
Your values
ⓘ Live results
- Value after 5 years
- $15,529.69
- Total depreciation
- $19,470.31
- Average loss per year
- $3,894.06
| Year | Value | Lost so far |
|---|---|---|
| 1 | $29,750.00 | $5,250.00 |
| 2 | $25,287.50 | $9,712.50 |
| 3 | $21,494.37 | $13,505.63 |
| 4 | $18,270.22 | $16,729.78 |
| 5 | $15,529.69 | $19,470.31 |
Quick answer
Car depreciation is usually modeled as a fixed percentage of the remaining value each year: value after t years = price × (1 − rate)^t. At 15% a year, a $35,000 car is worth about $15,530 after 5 years, a loss of $19,470 or roughly $3,890 a year on average.
What the Car Depreciation calculator does
This calculator projects a vehicle's value year by year from its purchase price and an annual depreciation rate, and shows the total and average yearly loss. The schedule table answers the two questions most owners have: what the car will fetch at trade-in time, and how much of your money the car has used up so far.
Depreciation is usually the largest cost of owning a newer car — bigger than fuel or insurance — but it is a projection, not a quote. Mileage, condition, color, accident history and local demand all move the real resale value. For a market price on a specific car, check a valuation guide or dealer offers and use this tool to see the trend.
The result feeds directly into other decisions: compare it with the balance on your car loan to see when you would have positive equity, or plug the projected resale value into the lease vs buy calculator.
The formula
V(t) = P × (1 − d)^t Total loss = P − V(t) Average loss per year = (P − V(t)) ÷ t
| Symbol | Meaning | Unit |
|---|---|---|
| V(t) | Estimated value after t years | $ |
| P | Purchase price (or today's value for a used car) | $ |
| d | Annual depreciation rate as a decimal (15% = 0.15) | — |
| t | Number of years from purchase | years |
This is the declining-balance method: each year's loss is a percentage of what is left, so the dollar loss shrinks every year even though the rate is constant. It matches how used-car prices behave better than a straight line. Real cars often lose more in year one than later, so if you are pricing a new car, a slightly higher rate for the first year gives a more realistic early curve. For tax depreciation of a business vehicle, the IRS rules (MACRS and the luxury-auto limits) apply instead — see IRS Publication 946.
Worked examples
New SUV over a typical loan term
A $45,000 new SUV, assuming 15% a year, over 5 years.
Inputs
- Purchase price45000 $
- Depreciation per year15 %
- Years to project5 years
Result
- Value after 5 years$19,966.74
- Total depreciation$25,033.26
- Average loss per year$5,006.65
The SUV keeps about 44% of its price and loses roughly $25,000. Compare the projected value with your loan balance in year 2 or 3: if you owe more than the car is worth, trading it in early rolls negative equity into the next loan.
Three-year-old used car
A used car bought for $22,000, assuming a gentler 10% a year because the steepest early drop has already happened, over 4 years.
Inputs
- Purchase price22000 $
- Depreciation per year10 %
- Years to project4 years
Result
- Value after 4 years$14,434.20
- Total depreciation$7,565.80
- Average loss per year$1,891.45
It loses about $7,600, under $1,900 a year — one reason buying a car a few years old is cheaper per year of ownership than buying new.
Luxury car with fast depreciation
A $70,000 luxury sedan, assuming 20% a year, kept for 3 years.
Inputs
- Purchase price70000 $
- Depreciation per year20 %
- Years to project3 years
Result
- Value after 3 years$35,840.00
- Total depreciation$34,160.00
- Average loss per year$11,386.67
About $34,000 is lost in three years, more than $11,000 a year. High-priced cars with expensive maintenance often depreciate this quickly, which is why many are leased instead of bought.
Value remaining by depreciation rate
Percentage of the purchase price left after each period, using the formula above. Read across to see how quickly a small difference in rate compounds: after 7 years, a car losing 10% a year keeps more than twice the value of one losing 20%.
| Annual rate | After 1 year | After 3 years | After 5 years | After 7 years |
|---|---|---|---|---|
| 10% | 90% | 73% | 59% | 48% |
| 15% | 85% | 61% | 44% | 32% |
| 20% | 80% | 51% | 33% | 21% |
| 25% | 75% | 42% | 24% | 13% |
Choosing a depreciation rate
- New mainstream cars: a rate around 15% a year is a common planning figure, with the first year often steeper.
- Trucks and popular, reliable models: these tend to hold value better; try 10–12%.
- Luxury cars and models with high running costs: 18–25% is more realistic.
- Cars already several years old: the curve flattens, so 8–12% is usually closer.
- Find your own rate: look up today's asking prices for the same model at different ages and solve backwards. If a $30,000 car is selling for $18,000 three years later, the rate is 1 − (18,000 ÷ 30,000)^(1/3), or about 16%.
Resale value and the year-by-year schedule
The schedule under the result lists the value and cumulative loss at the end of every year (up to 20). Use it to pick a selling point: the dollar loss is largest in the early years, so keeping a car longer spreads the biggest drop over more years of use. To estimate resale value at a specific age, set the years field to that age and read the projected value. For a fleet or business vehicle depreciation schedule for tax, use the IRS recovery periods rather than market rates, because tax depreciation and market value are calculated differently.
How to use the Car Depreciation Calculator
- 1Enter the price you paid, or today's market value if you are projecting from now.
- 2Enter an annual depreciation rate — around 15% for a typical new car, less for an older one.
- 3Enter how many years ahead to project.
- 4Read the future value, the total loss and the average yearly loss, then check the yearly table.
Frequently asked questions
How much does a car depreciate in the first year?
A figure of around 20% for the first year is commonly quoted for new cars, though it varies widely by model and market conditions. Used cars lose less in percentage terms because the steepest drop has already happened.
Do cars ever stop depreciating?
Value falls more slowly as a car ages, but most keep losing value until they reach scrap or parts value. A few collectible or rare models rise in value, which this calculator does not model.
Does mileage affect depreciation?
Yes. Higher-than-average mileage lowers resale value, so if you drive much more than typical, use a higher rate. Valuation guides adjust prices for mileage directly.
How do I calculate depreciation per year?
Subtract the projected value from the purchase price and divide by the number of years. At 15% over 5 years on $35,000, that is $19,470 ÷ 5, or about $3,890 a year.
Can I deduct car depreciation on my taxes?
Only for business use, and only under IRS rules (or your country's equivalent), which use set recovery periods and caps rather than market value. A tax professional can confirm what applies to you.
References
- Publication 946, How To Depreciate Property — Internal Revenue Service
- Publication 463, Travel, Gift, and Car Expenses — Internal Revenue Service
About this calculator
- Built and reviewed by the Calculation Machine team · How we build and test calculators
- Last reviewed: October 24, 2026
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