Car Depreciation Calculator

How to use the car depreciation calculator

• Purchase price: what you pay, or plan to pay, for the car.
• Car age at purchase: how old it is when you buy it. Enter 0 for a car that is new.
• Depreciation period (optional): how many years you expect to own the car.
• Depreciation rate: Low, Medium or High. Pick Low for models that hold their value well and High for models that lose it quickly.

Leave the period empty and the calculator lists the estimated value after each of the next eight years, with the cumulative percentage lost beside each figure. Enter a period and you get one summary instead: the value at the end of it, the total depreciation in dollars and as a percentage of the price, and the average loss per year.

How the estimate is built

Depreciation is the fall in a car's market value as it ages. It is steepest at the start and flattens out later, so the calculator applies a different yearly percentage depending on how old the car is at the beginning of each year:

value after n years = price × (1 − d1) × (1 − d2) × … × (1 − dn)Each d is the yearly percentage from the table that matches the car's age at the start of that year.

Only whole years are simulated. If you enter a period of 3.5 years, the value shown is the value after 3 whole years, while the average loss per year is divided by 3.5.

What drives depreciation

The three levels are a simplification. In practice a car's resale value depends on a handful of things that no calculator can see:

• Make and model: brands with a reputation for reliability, and models in steady demand, tend to keep more of their price.
• Mileage and condition: high mileage, accident damage and visible wear all pull the value down, as does a patchy service history.
• Market conditions: fuel prices, interest rates, new-model launches and shortages of new cars can move used prices by thousands.
• Powertrain and technology: a model that is overtaken by a newer generation or a different type of drivetrain often loses value faster.
• Trim and options: unusual colours and heavily customised cars appeal to fewer buyers.

If you know that a specific model has depreciated faster or slower than average, choose High or Low accordingly, and treat the result as a planning figure rather than a quote.

Worked example: a new car

You buy a new car for $30,000 and choose the Medium level. The first year costs 25%, and every later year costs 15.6%:

Keep the car for five years and the summary reads: value $11,417.01, total depreciation $18,582.99, which is 61.94% of the price, or an average of $3,716.60 a year. The same new car at the Low level would still be worth $16,241.74 after five years, and at the High level only $7,442.60.

New car versus used car

Because most of the loss comes early, buying a car that is a few years old moves that loss onto the previous owner. In the example above the new car is worth $16,027.56 after three years, so the first three years cost its first owner $13,972.44.

If you buy that car at three years old for $16,027.56 and keep it for five more years at the Medium level, it ends up worth $6,864.04. You lose $9,163.52 (57.17% of what you paid), roughly half of the new-car buyer's five-year loss in dollars. The percentage is similar, but the dollars are far smaller because the starting price is lower.

Depreciation is only one part of ownership cost. Compare it with insurance, fuel, repairs and financing, and see the loan calculator for the cost of borrowing. The percent decrease calculator works out the drop between any two values, and the future value calculator shows what the money could grow to if invested instead.

These are estimates from a simplified model, not an appraisal or financial advice. Actual values depend on the individual car and the market. See the disclaimer.