Economy / Sedan (Average)
Pickup Truck (High Retention)
Luxury Vehicle (Fast Depreciation)
Electric Vehicle (Rapid Depreciation)
SUV / Crossover
Estimated Vehicle Value
Total Value Lost:
Percentage of Value Retained:
Average Yearly Loss:
Understanding Car Depreciation: How Much Is Your Car Actually Worth?
Depreciation is the single largest expense of car ownership, often costing more than fuel, insurance, or maintenance. From the moment you drive a new vehicle off the dealership lot, its market value begins to decline. Understanding the mechanics of car depreciation is essential for savvy buyers and sellers alike.
What is Car Depreciation?
Car depreciation is the difference between the price you paid for your vehicle and the price you can sell it for later. On average, a new car loses approximately 15% to 20% of its value in the first year. By the five-year mark, most vehicles have lost about 60% of their original purchase price.
Key Factors That Influence Resale Value
Vehicle Type: Trucks and SUVs typically hold their value better than luxury sedans or electric vehicles due to high demand and durability.
Mileage: The more a car is driven, the faster it depreciates. The industry standard is roughly 12,000 to 15,000 miles per year. Exceeding this significantly lowers the car's value.
Condition: Mechanical health and aesthetic condition (paint, interior, odors) play a massive role in the final appraisal.
Brand Reputation: Brands known for reliability, such as Toyota or Honda, tend to have lower depreciation rates than brands perceived as having high long-term maintenance costs.
Calculation Example
If you purchase a luxury sedan for $50,000 and it has a high depreciation rate of 18% per year, after 3 years the math looks like this:
Year 1: $50,000 – 20% (First year hit) = $40,000
Year 2: $40,000 – 18% = $32,800
Year 3: $32,800 – 18% = $26,896
In this scenario, your $50,000 investment is worth just under $27,000 after only 36 months of ownership.
How to Minimize Depreciation Loss
Buy Used: By purchasing a car that is 2-3 years old, the previous owner has already paid for the steepest part of the depreciation curve.
Maintain Meticulous Records: A car with a fully documented service history sells for more than one with a mysterious past.
Keep the Mileage Low: If possible, use public transit or a secondary older vehicle for long commutes.
Choose Popular Colors: Neutral colors like white, black, and silver are easier to resell than "statement" colors like bright orange or lime green.
function calculateDepreciation() {
var price = parseFloat(document.getElementById("purchasePrice").value);
var age = parseFloat(document.getElementById("carAge").value);
var rate = parseFloat(document.getElementById("vehicleType").value);
var miles = parseFloat(document.getElementById("annualMileage").value);
if (isNaN(price) || isNaN(age) || isNaN(miles) || price 12000) {
mileagePenalty = ((miles – 12000) / 1000) * 0.005; // 0.5% extra depreciation per 1k extra miles
} else if (miles 0) {
mileagePenalty = ((miles – 12000) / 1000) * 0.003; // Slight value retention for low miles
}
var effectiveRate = rate + mileagePenalty;
if (effectiveRate > 0.40) effectiveRate = 0.40; // Cap annual depreciation
if (effectiveRate = 1
var currentVal = price;
if (age >= 1) {
currentVal = price * 0.80; // First year drop
if (age > 1) {
currentVal = currentVal * Math.pow((1 – effectiveRate), (age – 1));
}
} else {
// For cars less than a year old, linear drop
currentVal = price * (1 – (0.20 * age));
}
if (currentVal 0 ? totalLost / age : 0;
document.getElementById("resaleValue").innerHTML = "$" + currentVal.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("totalLost").innerHTML = "$" + totalLost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("percentRetained").innerHTML = pctRetained.toFixed(1) + "%";
document.getElementById("yearlyLoss").innerHTML = "$" + yearlyAvg.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + " / yr";
document.getElementById("result-box").style.display = "block";
}