Car Depreciation Calculator
↻ Updated 2026See how a car's value falls over time. Set the purchase price, first-year and later-year depreciation rates, and the number of years to project the value retained.
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Runs entirely in your browser — nothing you enter is sent to us.How this works
How to read your car's value curve
A $35,000 car at the default rates is worth $14,616.18 after five years — 41.8% of what you paid. The shape matters more than the endpoint: year one costs $7,000 and year five costs $2,579.33, for the same car losing the same 15–20% each time. Depreciation is a percentage of a shrinking number, so the dollars shrink with it.
How this calculator projects a car's value each year
Declining balance, with a separate rate for the first year. Each year the car keeps whatever share of its value the rate doesn't take, and the next year's loss is computed on that smaller base. Year one gets its own rate because the first-year drop is the anomaly — the cliff between 'new' and 'used' is a one-time event that no later year repeats.
This is geometric, not linear. A linear model would subtract a fixed dollar amount every year and hit zero on a schedule; this one approaches zero without ever arriving, which is closer to how used cars actually behave.
value(0) = price value(1) = price × (1 − first-year rate) for each year y > 1: value(y) = value(y − 1) × (1 − later rate) total depreciation = price − value(n) value retained = value(n) ÷ price
- price
- What you paid for the car — the model treats this as the starting value; in reality tax and fees are sunk the moment you sign
- first-year rate
- The share of value lost in year one — defaults to 20%; the slider runs 5% to 40% in 1-point steps
- later rate
- The share of remaining value lost in each subsequent year — defaults to 15%; applied to the previous year's value, not the original price
- n
- Years to project — the slider runs 1 to 15
- value(y)
- Estimated value at the end of year y — a market estimate, not a guaranteed resale or trade-in offer
The default rates are worth interrogating rather than accepting. Roughly 20% in year one is the figure most commonly cited across the US market, but published ranges run from about 20% to 35% for year one, and 8% to 12% a year thereafter is also widely quoted — meaningfully gentler than this page's 15% default. There is no single correct pair of numbers, because depreciation is a property of a specific model in a specific market, not of cars in general.
So treat the sliders as the point of the page. The interesting question isn't what a generic car does; it's how much your answer moves when the year-one rate goes from 20% to 30%. On a $35,000 car over five years, that swing is $1,827.03 of terminal value — smaller than most people expect, because the later years dampen it.
Worked examples
Example: a $35,000 car over five years at 20% then 15%
The calculator's defaults, so you can follow along on the page. Note how the annual dollar loss falls every single year while the rate stays flat.
| At purchasestarting value | $35,000.00 |
| End of year 1− $7,000.00 at 20% | $28,000.00 |
| End of year 2− $4,200.00 at 15% | $23,800.00 |
| End of year 3− $3,570.00 at 15% | $20,230.00 |
| End of year 4− $3,034.50 at 15% | $17,195.50 |
| End of year 5− $2,579.33 at 15% | $14,616.18 |
| Total depreciation58.2% of the price | $20,383.83 |
| Value retained$14,616.18 ÷ $35,000 | 41.8% |
Year one costs $7,000 — more than years four and five combined. That's the compounding working: 15% of $28,000 is $4,200, but 15% of $17,195.50 is only $2,579.33. The car is losing value at the same rate throughout and losing it in ever-smaller amounts, which is why the curve flattens rather than falling to zero.
Example: how much the year-one rate actually matters
Hold the price at $35,000, the later rate at 15%, and the horizon at five years. Move only the first-year slider across its range.
| 10% first year47.0% retained | $16,443.20 |
| 20% first year41.8% retained — the default | $14,616.18 |
| 30% first year36.5% retained | $12,789.15 |
| 40% first year31.3% retained | $10,962.13 |
Quadrupling the first-year rate from 10% to 40% only cuts the five-year value by a third. The year-one cliff dominates the first twelve months and then stops mattering much, because everything after it compounds off a base that all four scenarios shrink at the same 15%. Over a long enough hold, the later rate — the one people don't argue about — does more work than the headline number everyone quotes.
Frequently asked questions
How much does a new car depreciate in the first year?
Around 20% is the most commonly cited figure, and it's this page's default. Published ranges are wider than that single number suggests — estimates of 20% to 35% in year one appear across the major valuation sources, and a large share of the loss lands immediately, with roughly 9% to 11% commonly attributed to simply driving off the lot.
The reason the range is so wide is that 'a new car' isn't a thing that depreciates. Specific models do. A high-demand truck and a discontinued sedan bought the same day for the same money will be thousands apart in a year. Use the slider rather than the average: the average describes a market you aren't buying.
How much is my car worth after 5 years?
At this page's defaults, 41.8% of what you paid — $14,616.18 on a $35,000 car. The rule of thumb you'll see most often is that a car keeps about half its value after five years, which corresponds to a gentler later-year rate than the 15% default here. Set the later rate to 10% and the same car retains 52.5% — $18,370.80.
That gap is worth noticing, because it's a gap between two equally common rules of thumb rather than between a rule and a fact. This calculator's defaults are a somewhat pessimistic reading. Neither the 15% nor the 10% is measured from your car — only a current valuation from a source that prices your specific model, mileage and condition can do that.
Do electric cars depreciate faster than gas cars?
Historically yes, and by a wide margin — but the finding is moving fast enough that stating it as a settled fact would be wrong. Research from George Washington University found EVs depreciating meaningfully faster than the overall market over five years, and some earlier model years lost more than half their value in three.
The same research reports the trend narrowing: newer long-range EVs are holding value considerably better, and some now match or beat their gas equivalents. Two causes usually given for the historical gap are that EVs carried large purchase incentives — which depress resale, since the buyer's real cost was lower than the sticker — and that range improved fast enough to date older cars quickly. The first cause weakened in 2026, when the federal purchase credit ended. If you're modelling an EV here, the honest move is to raise the first-year slider and treat the result as a wide range; the EV vs gas calculator covers the running-cost side that partly offsets it.
Why does a car lose so much value in the first year?
Mostly because 'new' is a category, not a condition. The moment a car is titled it moves from the new market to the used market, and those two markets have different buyers, different financing and different prices — for a car that is mechanically identical. Nothing about the vehicle changed; its classification did.
Three other things pile on. Manufacturer incentives and dealer discounts mean the transaction price was often below the sticker the resale is compared against. The full factory warranty starts running down immediately. And next year's model arrives, which redefines yours as last year's. This calculator models the result — the one-time cliff — with a separate first-year rate, without trying to attribute it.
Does mileage affect car value?
Substantially, and this calculator has no field for it — which is its largest single blind spot. Depreciation here is purely a function of time. Two identical cars, one at 6,000 miles a year and one at 25,000, produce exactly the same curve on this page and would not sell for anything like the same money.
Mileage typically works against a rough annual baseline near 12,000 to 15,000 miles: well under it and the car carries a premium, well over and it's discounted, with lease contracts formalising the same idea as a per-mile overage charge. If you drive far more or less than average, treat the rate sliders as where you compensate — there's nowhere else in this model for mileage to go.
Why your car won't follow this curve
This is a smooth exponential decay applied to a market that is neither smooth nor exponential. It's a useful shape and a poor forecast.
- The rates are assumptions, and they're the whole answer — Nothing in this page measures anything. The 20% and 15% defaults are typed into the component as starting positions, not derived from valuation data — the output is only as good as the two numbers you pick, and reasonable sources disagree about both. The later-year rate in particular is often quoted at 8–12%, well below this page's 15% default.
- No make, model, mileage or condition — The four inputs are price, years and two rates. Depreciation in reality is dominated by which car you bought and how you used it — the variables this model doesn't have. A truck and a luxury sedan at the same price diverge by tens of thousands over five years, and this page cannot tell them apart.
- It starts from the price, not what you spent — Sales tax, doc fees, title and registration are gone the instant you sign and never appear in a resale value. Real value retained against real money spent is worse than the percentage shown here — on the defaults, a $35,000 car with 7% tax cost $37,450 and returns $14,616.18, which is 39.0% of what you actually paid rather than 41.8%.
- The market moves under the curve — Used-vehicle prices are volatile in ways no smooth rate can express — the 2021-22 shortage pushed some two-year-old cars above their original sticker, briefly making depreciation negative. Fuel prices, interest rates, recalls and model refreshes all move resale, and none of them are annual percentages.
- It's a value estimate, not an offer — Trade-in, private-party and dealer-retail are three different prices for the same car on the same day, and the spread between them is routinely thousands. This page produces one number and doesn't say which of the three it is.
- ·Standard auto-loan amortization; depreciation & running costs are estimates
Rates, brackets and limits here are checked against primary sources. If a number still looks off, email support@realmoneyiq.com and we'll review and fix it.
RealMoneyIQ provides free educational calculators, not financial, tax, investment or legal advice. Results are estimates based on the assumptions you enter and publicly published rates; your actual outcome will differ. Always confirm decisions with a licensed professional who knows your full situation.