Car Depreciation Calculator
Estimate the future resale value of your vehicle and total value lost over time.
Sedan / Hatchback (Average)
SUV / Truck (Retains value better)
Luxury Vehicle (Depreciates faster)
Electric Vehicle (High early depreciation)
Estimated Future Value:
Total Depreciation Loss:
Annual Average Cost:
How Car Depreciation Works
Depreciation is the difference between the amount you spend when you buy a car and the amount you get back when you sell or trade it in. For most people, depreciation is the single largest expense of owning a vehicle, often exceeding the cost of fuel, insurance, or maintenance.
On average, a new car loses approximately 20% of its value in the first year and roughly 15% each year thereafter. By the time a car is five years old, it has typically lost about 60% of its original purchase price.
The Depreciation Formula
This calculator uses the declining balance method to estimate your car's value. The formula applied is:
V = P × (1 – R)n
Where:
V = Future Value
P = Current Purchase Price
R = Annual Depreciation Rate (percentage expressed as a decimal)
n = Number of years
Where:
V = Future Value
P = Current Purchase Price
R = Annual Depreciation Rate (percentage expressed as a decimal)
n = Number of years
Example Calculation
Imagine you purchase a $40,000 SUV. Since SUVs tend to hold their value slightly better, we use a 12% depreciation rate. If you plan to sell it in 5 years:
- Year 1: $35,200
- Year 2: $30,976
- Year 3: $27,258
- Year 4: $23,987
- Year 5: $21,109
In this scenario, your total "cost of ownership" regarding value loss is $18,891, or roughly $3,778 per year.
Tips to Minimize Depreciation
- Choose "Safe" Colors: Silver, White, and Black cars generally resell faster and for higher prices than bright or unusual colors.
- Keep Mileage Low: High mileage is the fastest way to tank a car's value. Try to stay under 12,000 miles per year.
- Detailed Service Records: Buyers pay a premium for cars that have a documented history of oil changes and scheduled maintenance.
- Buy Used: By purchasing a car that is 2-3 years old, the original owner has already taken the massive "first-year" depreciation hit.