Vehicle Depreciation Calculator
Project what your car will be worth after several years using a declining-balance depreciation rate — and see the loss year by year.
How it works
Value after n years = price × (1 − rate)^n · Total depreciation = price − final value
Cars lose value fastest early on, which a declining-balance model captures: each year takes a fixed percentage of the remaining value rather than of the original price, so the dollar loss shrinks over time. A typical new car sheds 15–20% a year and can be worth roughly half its price after five years. The biggest single hit is driving off the lot — the new-to-used transition — which this smooth model averages into the first year.
Worked example
A $35,000 car depreciating 15% a year is worth 35,000 × 0.85 = $29,750 after one year, and 35,000 × 0.85^5 ≈ $15,530 after five years. That is a $19,470 total loss, about $3,894 a year, retaining roughly 44% of the original price.
Frequently asked questions
How much does a car depreciate per year?
Most new cars lose around 15–20% of their value each year for the first several years, with the steepest drop in year one. Luxury cars and EVs often depreciate faster, while some trucks and popular models hold value better.
Why use declining balance instead of a flat amount?
A flat dollar loss each year would eventually drive the value negative and overstates later-year losses. Declining balance takes a percentage of the current value, so losses taper off — which matches how used-car prices actually behave.
Does this include the drive-off-the-lot drop?
This smooth model averages that initial hit into the first year. In reality a new car can lose 10% the moment it is titled, so first-year real-world depreciation is often front-loaded compared with this estimate.
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Educational estimate only — real costs vary by lender, insurer, location and driving habits. Not financial advice.