Car depreciation is the difference between the amount you paid for your vehicle and its current market value. Most new cars lose a significant portion of their value the moment they are driven off the lot, and continue to decline in value every year thereafter. On average, a new car loses about 20% of its value in the first year and roughly 60% of its value after five years.
How This Calculator Works
Our Car Depreciation Calculator uses the declining balance method. This method assumes that the car loses a fixed percentage of its remaining value each year. While luxury cars and high-mileage vehicles may depreciate faster, well-maintained economy cars often hold their value better. We factor in the condition of the vehicle to adjust the annual percentage drop.
Example Calculation
If you purchase a car for $40,000 and it is in Good condition (20% annual depreciation):
Year 1: Value drops to $32,000 (Loss of $8,000)
Year 2: Value drops to $25,600 (Loss of $6,400)
Year 3: Value drops to $20,480 (Loss of $5,120)
After three years, the total depreciation would be $19,520, leaving you with a vehicle worth approximately 51% of its original price.
Factors That Influence Depreciation
Several variables impact how quickly your car loses value:
Mileage: The more you drive, the faster the value drops. High mileage suggests more wear and tear on engine components.
Brand Reputation: Certain brands (like Toyota or Honda) are known for longevity and typically have slower depreciation rates.
Fuel Economy: In times of high gas prices, fuel-efficient vehicles hold their value better than gas-guzzling SUVs.
Maintenance History: A documented history of regular oil changes and services can increase resale value by proving the car was cared for.
function calculateCarDepreciation() {
var price = parseFloat(document.getElementById("purchasePrice").value);
var age = parseFloat(document.getElementById("carAge").value);
var rate = parseFloat(document.getElementById("vehicleCondition").value);
if (isNaN(price) || isNaN(age) || price <= 0 || age < 0) {
alert("Please enter valid positive numbers for price and age.");
return;
}
// Formula: Current Value = P * (1 – r)^t
// Note: First year usually has a steeper drop, but for simple modeling
// we use a consistent declining balance based on the selected condition.
var currentValue = price * Math.pow((1 – rate), age);
var totalLoss = price – currentValue;
var percentLoss = (totalLoss / price) * 100;
document.getElementById("currentValueText").innerText = "$" + currentValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("totalLossText").innerText = "$" + totalLoss.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("percentLossText").innerText = percentLoss.toFixed(1) + "%";
document.getElementById("calc-result").style.display = "block";
}