Vehicle Depreciation Calculator
How Car Depreciation Impacts Your Wealth
Vehicle depreciation is the difference between what you paid for your car and what it is worth when you decide to sell or trade it in. For most consumers, depreciation is the single largest expense of owning a new vehicle—often exceeding the costs of fuel, insurance, and maintenance combined.
Understanding the Calculation Logic
Our calculator uses industry-standard decay models to estimate value loss. Typically, a new car loses about 15% to 20% of its value in the first year. After that, it usually loses roughly 10% to 15% per year. However, several factors modify this curve:
- Vehicle Class: Trucks and SUVs often hold value better (retaining roughly 50-60% after 5 years) compared to luxury sedans which may drop to 40% value in the same period.
- Mileage: The average driver covers 12,000 to 15,000 miles per year. Exceeding this "normal" range accelerates depreciation because of increased wear and tear.
- Power Source: Electric vehicles currently experience higher initial depreciation due to rapid battery technology advancements and federal tax credit impacts on used prices.
Example Depreciation Scenario
If you purchase a Standard SUV for $40,000 and drive it 12,000 miles per year, here is the typical breakdown over 5 years:
- Year 1: Value drops to $32,000 (20% loss).
- Year 3: Value drops to approximately $24,500.
- Year 5: Residual value sits near $18,000 (45% of original price).
Practical Tips to Minimize Value Loss
While you cannot stop depreciation entirely, you can slow it down. Maintain a comprehensive service record; buyers pay a premium for vehicles with documented oil changes and inspections. Keep the mileage low by using a secondary vehicle for long commutes if possible. Finally, choose popular exterior colors like silver, white, or black, as "niche" colors can reduce your pool of potential buyers and lower resale price.