Car Depreciation Calculator
Estimate how a car's value falls over time. Enter the purchase price and an annual depreciation rate to see the resale value after any number of years — and just how much of the price disappears.
How to use this calculator
- Enter the car's purchase price.
- Set the first-year drop (new cars lose most here) and the annual rate after that.
- Choose how many years to project the value forward.
Formula used
This is declining-balance depreciation: each year's loss is a percentage of the current value, not the original, so the car loses more early and less later. The steep first-year drop is modelled separately because new cars depreciate hardest in year one.
Example calculation
A 30,000 car, 20% first-year then 15%/year: after year 1 it's 24,000; after 5 years about 12,530 — roughly 58% lost.
Well over half the value gone in five years, with the biggest single hit the moment you drove it off the forecourt.
The biggest cost of car ownership
Depreciation is usually a car's largest running cost — bigger than fuel, insurance or servicing — yet it's invisible because you never write a cheque for it. It just quietly erodes what the car is worth. New cars are hit hardest: many lose 15–20% the moment they leave the dealership and 50–60% over the first three to five years, which is the entire financial case for buying nearly-new instead.
Declining-balance is the realistic model because a car loses a percentage of its current value each year — steep early, gentler later — rather than a flat amount. Actual rates vary enormously by model: desirable makes and reliable, in-demand cars hold value far better than others, so the rate here is a planning assumption. The takeaway is strategic: buying a two-to-three-year-old car lets someone else absorb the worst depreciation while you get most of the useful life.
Why use this calculator?
- See depreciation, the hidden and often largest cost of ownership.
- Compare buying new vs nearly-new on value retained.
- Project resale value to plan when to sell.
Frequently asked questions
How much does a car depreciate per year?
New cars typically lose 15–20% in the first year and around 15% each year after, totalling 50–60% over five years. Rates vary widely by make and model — some hold value much better. Enter your own assumptions above.
Why do new cars lose value so fast?
The steepest drop is immediate — a car becomes 'used' the moment it's registered, losing the new-car premium. High early depreciation is why buying a two-to-three-year-old car often gives the best value: someone else absorbed the worst of it.
Is depreciation really my biggest car cost?
For most newer cars, yes — it usually exceeds fuel, insurance and maintenance combined, especially in the early years. Because you don't pay it directly, it's easy to overlook, but it's very real when you come to sell.