Car Depreciation Calculator

Depreciation is compound: each year the loss applies to the already-reduced value, with the formula value × (1 − rate)^years. A $30,000 car losing 15% a year is worth $25,500 after year one, $21,675 after year two, and about $13,311 after 5 years — a loss of more than 55%, even though the *rate* never went above 15% in any single year. Compounding, not the rate itself, is what makes the multi-year loss look so much larger than a simple 15%-times-5 estimate would suggest.

Real depreciation is not actually a smooth, constant percentage every year — it is front-loaded. A new car commonly loses a disproportionate share of its value the moment it is driven off the lot and over the first 12 months, simply because it converts from "new" to "used" in the eyes of the market, before age or mileage have done anything at all. The rate then tends to slow down in later years as the car settles into the broader used-car market. This calculator's single constant rate is a deliberate simplification — useful for a multi-year projection — that averages over a curve which is, in reality, steeper at the start and flatter later.

On average, cars lose 10% to 20% a year, with the steepest drop in the first year — often 10% to 20% in that year alone. Brand, demand, mileage and condition all matter. Models with strong resale demand hold their value better, and fuel type or body style can shift over the ownership period as market preferences and gas prices change, something a fixed input rate cannot see coming.

Two cars of the same age and mileage can still be worth different amounts. Accident and title history (a "clean" title commands more than a rebuilt or salvage one), the number of previous owners, documented maintenance records, and even less obvious factors like color or trim popularity all shift resale value at the margins. None of these enter this calculator's math — the rate you choose is meant to already reflect your best estimate incorporating that context for your specific vehicle, not a number this tool derives on its own.

Depreciation is a real cost even though it never shows up as a monthly bill: it is the value you will not get back at resale or trade-in. Including it in a cost per mile figure — alongside fuel, insurance, registration and maintenance — gives a far more honest picture of what a car actually costs to own than fuel spending alone. For anyone who trades cars every few years rather than driving one for a decade or more, depreciation is frequently the single largest ownership cost, ahead of fuel.