Car depreciation is the difference between the amount you spent to buy your vehicle and the amount you can get when you sell it or trade it in. It is often the single largest expense of owning a car, yet many drivers overlook it because it doesn't involve a monthly bill.
How Does Car Depreciation Work?
Most new cars lose about 15% to 20% of their value in the first year alone. After that, the rate typically stabilizes to around 10% to 15% per year. The formula used in this calculator follows the declining balance method, which applies a constant percentage of depreciation to the remaining value of the car each year.
Real-World Example:
If you buy a car for $40,000 and it depreciates at 15% per year:
Year 1 Value: $34,000
Year 2 Value: $28,900
Year 3 Value: $24,565
In just three years, the car has lost over $15,000 in value.
Factors That Affect Your Car's Value
Mileage: The more you drive, the lower the resale value. High mileage signals wear and tear on the engine and transmission.
Condition: Scratches, dents, and interior stains significantly reduce value. A well-documented service history can help mitigate loss.
Brand Reputation: Brands like Toyota and Honda tend to hold their value longer than many European luxury brands.
Fuel Efficiency: As gas prices fluctuate, fuel-efficient cars or hybrids often retain better value than gas-guzzling SUVs.
How to Minimize Depreciation
While you cannot stop depreciation, you can slow it down. Choosing a car with a high resale value history, keeping the mileage low, and performing regular maintenance are the best ways to protect your investment. Additionally, buying a "nearly new" car (2–3 years old) allows the previous owner to take the biggest hit on the initial depreciation curve.
function calculateDepreciation() {
var price = document.getElementById("purchasePrice").value;
var age = document.getElementById("carAge").value;
var rate = document.getElementById("depreciationRate").value;
var resultBox = document.getElementById("resultBox");
if (price === "" || age === "" || price <= 0 || age < 0) {
alert("Please enter valid positive numbers for price and age.");
return;
}
var p = parseFloat(price);
var t = parseFloat(age);
var r = parseFloat(rate) / 100;
// Formula: A = P * (1 – r)^t
var futureValue = p * Math.pow((1 – r), t);
var totalLost = p – futureValue;
var percentRetained = (futureValue / p) * 100;
document.getElementById("currentValue").innerText = "$" + futureValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("totalLost").innerText = "$" + totalLost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("percentRetained").innerText = percentRetained.toFixed(1) + "%";
resultBox.style.display = "block";
resultBox.scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}