The car
Depreciation rates
Defaults are market rules of thumb, not data for your model. Adjust them if you know better.
Running costs (optional)
Value over time
What it costs you, over 5 years
Year by year
| Year | Age | Value | Lost that year | Retained |
|---|
Fuel and insurance arrive as invoices, so they get budgeted. Depreciation is silent until you sell - and on a newer car it usually dwarfs the rest.
The first-year cliff only happens once. Buy at three years old and the calculator starts from where the curve actually is, not from a new car's price.
What you paid, what you earn per mile, what you insure for - all calculated on your device. Nothing is uploaded, and it works offline.
How car depreciation works
Depreciation is simply the gap between what you paid for a car and what you get back for it. It is the largest cost of running most newer cars, and the one people consistently forget, because unlike fuel or insurance it never arrives as a bill. You only meet it once, at the end, when the offer comes in lower than you hoped.
The first-year cliff
A new car loses roughly 15-20% in its first year. The reason is not that the car got worse - it is that it stopped being new. A used car cannot command a new car's price however few miles it has covered, and the price you paid included things no private buyer will reimburse: delivery, registration, dealer margin, and whatever incentives were folded into the deal.
After that first drop the loss settles into a steadier pattern of roughly 15% of the remaining value each year. Because it is a percentage of a shrinking number, the money lost gets smaller every year even though the rate stays flat: 15% of a $30,000 car is $4,500, but 15% of a $10,000 car is $1,500.
Rules of thumb, not rules
Those figures are market-wide averages and this page uses them as defaults, but the spread around them is enormous. Some models hold value remarkably well; others fall off a cliff and keep falling. Mileage, condition, service history, colour, fuel type, and simple fashion all move the number. That is why the rates here are editable - if you have a real figure for your model, use it, and the whole projection updates.
What actually moves the number
Mileage is the big one after age: well above average annual distance is punished hard at resale. Condition and history matter more than people expect - a complete service record is worth real money. Desirability decides the rest: a common model in a common colour with a sensible specification sells quickly at a fair price, while an unusual one waits for an unusual buyer, and waiting is itself a discount.
How to lose less money
You cannot avoid depreciation, but you can decide how much of it you personally pay for.
Let someone else take the cliff
The single biggest lever: buy a car that is two or three years old. The first owner has already absorbed the steepest part of the curve, and you get a car that is mechanically nearly new for a substantially lower price - and it will lose value more slowly from there. Set this calculator to Bought used at three years and compare the five-year loss against buying the same car new. The difference is usually stark.
Keep it longer
Every year you keep a car, the percentage loss applies to a smaller number, so the annual cost of depreciation falls. Owning one car for eight years is dramatically cheaper than owning four cars for two years each - and each change of car costs you the spread between what you sell for and what you buy at, on top.
Protect the resale
Service it on schedule and keep the paperwork; the record is worth more than the receipts suggest. Keep mileage reasonable. Fix small damage before it becomes a negotiating point. And when you buy, remember you are also choosing your future buyer: a mainstream model in a neutral colour has a queue of them.
Financing the purchase too? The Loan Calculator shows what the interest adds - and it is worth knowing that a loan and depreciation are separate costs that can easily leave you owing more than the car is worth. To sanity-check any percentage here, use the Percentage Calculator.
Declining balance vs. straight line
The two methods answer different questions, and this calculator offers both.
Declining balance takes a percentage of the car's current value each year. The loss is steep at first and flattens out - which is exactly how the used market behaves, and why it is the default here. It is the right model if you want to know what you will actually be handed when you sell.
Straight line spreads the same total loss evenly across every year. It is what accountants and lease contracts typically use, because it is simple and predictable. But it understates the first-year loss badly and overstates the later ones, so a straight-line "book value" on a two-year-old car is usually optimistic compared to the real offer.
Put simply: use straight line for a book value, and declining balance for what the cheque will say.
Frequently asked questions
How much does a car depreciate per year?
As a rule of thumb, a new car loses roughly 15-20% of its value in the first year and about 15% of its remaining value each year after that, leaving it worth around half after three years and closer to 40% after five. These are averages across the market, not a rule: the actual figure depends heavily on the make, model, mileage, condition, and what buyers happen to want when you sell. Treat any depreciation calculator, including this one, as an estimate rather than a valuation.
Why do new cars lose so much value immediately?
Because the moment a car is registered it stops being new, and a used car cannot command a new car's price no matter how few miles it has. The new price also includes costs a private seller cannot recover - delivery, registration, dealer margin, and any incentives baked into the deal. That gap is the first-year cliff, and it is the single largest cost most owners never see on a bill.
Is depreciation really the biggest cost of owning a car?
For a newer car, usually yes - and it is the cost people most often leave out, because it never arrives as an invoice. Fuel, insurance, and servicing are visible and get budgeted; depreciation is silent until you sell. This calculator adds it to the running costs precisely so the comparison is honest. For an older, cheaper car the balance flips: there is little value left to lose, so fuel and repairs dominate.
How can I lose less money to depreciation?
Buy a car that is two or three years old and let the first owner absorb the steepest drop, then keep it for longer, since the yearly percentage loss shrinks as the value falls. Beyond that: keep mileage moderate, service it on schedule and keep the records, choose a model and colour that sell easily rather than an unusual specification, and avoid changing cars often - every transaction costs you the spread between selling and buying.
What is the difference between declining balance and straight-line depreciation?
Declining balance takes a percentage of the car's current value each year, so the loss is large at first and shrinks over time. That matches how cars actually behave in the market, which is why it is the default here. Straight-line spreads the same total loss evenly across every year - it is simpler and is what accounting and lease residuals often use, but it understates the early loss and overstates the late one. Use straight-line for a book value, declining balance for what you will really get.
Are my figures sent anywhere?
No. Every calculation runs in JavaScript in your browser, so the price you paid, your mileage, and your running costs are never uploaded, logged, or tracked. There is no account and no cookie banner, and the page keeps working offline once loaded.