Car Depreciation Calculator
Estimate what your car will be worth in future years, and how much value it loses.
What this tool does
A car depreciation calculator estimates a vehicle's future value using purchase price and annual depreciation rate. Enter what you paid, the rate the car loses value each year and how long you will keep it, and it returns the value at each year, the depreciation per year and the total value lost over the ownership period. Straight-line and declining-balance methods are both available, because they describe different shapes of value loss.
Estimates a vehicle's future value using purchase price and annual depreciation rate.
Shows the depreciation per year and the total value lost over the ownership period.
Supports straight-line depreciation and declining-balance depreciation.
Works out the effective annual rate from a price paid and a known later value.
How to use it
- Enter the purchase price of the car.
- Enter either the annual depreciation rate or a later value to derive it from.
- Choose straight-line or declining-balance depreciation.
- Enter how many years you will keep the car.
- Read the value in each year, the yearly depreciation and the total lost.
Why use this calculator
Depreciation is the largest cost of owning a new car and the one nobody sees, because it never appears as a payment - it shows up only when you sell. Estimating a vehicle's future value using purchase price and an annual rate turns that invisible loss into numbers you can plan around: what your trade-in will realistically be worth, how much a two-year-old car saves you over a new one, and how quickly a lease's residual value is consumed.
Why we built it
We built the car depreciation calculator with both straight-line and declining-balance methods, because car values do not fall in one shape: straight-line suits a fixed loss per year such as a lease residual, while declining balance matches the real market where a car keeps a percentage of what it is worth and loses most of its value early. The depreciation calculator handles the general asset version, and the car running cost calculator folds depreciation into total annual ownership costs.
If you are financing the purchase rather than paying cash, the auto loan calculator estimates the payments, and the cost per kilometre calculator spreads the loss over the distance you actually drive.
Who this tool is for
- Buyers deciding between new, nearly new and used
- Drivers planning a trade-in and wanting a realistic figure
- Lease customers checking the residual value at contract end
- Small business owners claiming vehicle depreciation as an expense
When to use it
- Before buying, to see what the car will be worth later.
- At renewal or trade-in time, to check the offer against expectation.
- When comparing keeping your current car with replacing it.
- For accounts, tax or a business mileage claim.
How it is calculated
Declining balance (the usual method for cars): value after n years = purchase price × (1 − rate)ⁿ, where rate is the annual depreciation rate as a decimal. Depreciation in year n = value at the start of the year − value at the end. Straight-line: value = purchase price − (purchase price − residual) ÷ life × years, so the same amount comes off every year.
Worked example: a car bought for 30,000 losing 15% a year is worth 30,000 × 0.85 = 25,500 after one year, 30,000 × 0.85² = 21,675 after two, and 30,000 × 0.85³ = 18,424 after three - a loss of 11,576 in three years, which is 38.6% of the price.
To find the rate from real numbers, use rate = 1 − (later value ÷ purchase price)^(1 ÷ years). A car worth 18,000 two years after costing 30,000 has an annual rate of 1 − (18,000 ÷ 30,000)^0.5 = 22.5%.
Straight-line or declining balance
Straight-line removes the same cash amount every year, which makes it easy to read and is how many lease contracts treat a vehicle: a 30,000 car reaching a 10,000 residual over five years loses 4,000 a year, flat. Declining balance removes the same percentage each year, so the loss is heaviest when the car is newest and slows as it ages - closer to what a classified advert shows.
| Year | Declining balance (15%) | Straight-line to 10,000 |
|---|---|---|
| 0 (purchase) | 30,000 | 30,000 |
| 1 | 25,500 | 26,000 |
| 2 | 21,675 | 22,000 |
| 3 | 18,424 | 18,000 |
| 4 | 15,660 | 14,000 |
| 5 | 13,311 | 10,000 |
Neither curve is the truth for every car - model, colour, mileage, condition and market demand all move the result - but both beat guessing, and both are transparent about the assumption being made.
A worked example
These are the values the calculator opens with, so you can see exactly what it does with them. Change any value on the page and the result updates; the figures below come from the same calculation.
| Input | Value |
|---|---|
| Currency symbol | $ (dollar) |
| Purchase price | $30,000 |
| Annual depreciation rate | 15% |
| Method | Declining balance |
| Ownership period | 3 years |
With those inputs, the calculator returns:
- Value after year 1: $25,500
- Value after year 2: $21,675
- Value after year 3: $18,424
- Depreciation per year: $4,500, then $3,825, then $3,251
- Total value lost over 3 years: $11,576 (38.6% of the price)
What actually drives a car's depreciation
Age and mileage dominate: the first year typically costs the most, often 20% to 35% off a new car, and every additional 10,000 km adds a visible cut. Condition and service history follow, then the big market factors - how desirable the model is, parts and fuel economy, insurance group, and whether the powertrain is falling out of favour.
| Holds value | Loses value |
|---|---|
| Low, consistent mileage | High annual mileage |
| Full service history | Missing stamps or repairs deferred |
| Popular, reliable models | Niche or unreliable models |
| Neutral colours | Polarising or faded paint |
| Efficient, in-demand engines | Thirsty or unfashionable engines |
| Private sale in good condition | Auction or part-exchange route |
What you enter, and what you get back
| Item | Details |
|---|---|
| Purchase price | What the car cost, including on-road charges if you count them. |
| Depreciation rate | Annual percentage, or derive it from a later value. |
| Method | Declining balance or straight-line. |
| Ownership period | Years you intend to keep it. |
| Result | Value each year, depreciation per year and total value lost. |
Issues you may run into
| What you see | Why it happens | What to do |
|---|---|---|
| Future value looks too high | Rate taken from a best-case guide. | Use a rate from real prices for your exact model. |
| Straight-line reaches zero | No residual value entered. | Set a realistic resale value at the end of the period. |
| Rate unknown | Only a price and a later value are known. | Let the calculator derive the annual rate from both. |
| Two methods disagree | They describe different curves. | Declining balance matches most real market listings. |
Assumptions and limitations
- Estimates only - actual resale values depend on model, condition, mileage and market demand.
- A single annual rate cannot reproduce the sharp first-year drop on its own.
- Does not model regional differences, seasonal demand or sudden changes in fuel prices.
- Salvage or accident history, modifications and outstanding finance are not accounted for.
Frequently asked questions
How much does a car depreciate per year?
A common rule is 15% to 25% a year, but the first year is the steepest - new cars often lose 20% to 35% of their price before they have covered 20,000 km. Depreciation then slows. A car that costs 30,000 and loses 15% a year is worth about 18,400 after three years.
How do I calculate car depreciation?
Subtract the car's current value from what it cost to find the total lost. For a rate, use annual rate = 1 − (current value ÷ purchase price)^(1 ÷ years). To project forward, multiply the price by (1 − rate) raised to the number of years - or enter the figures here and let the calculator do it.
What is the residual value of a car?
It is the estimated worth of the vehicle at a set future point - the end of a lease, the end of a finance term or the point you plan to sell. Leases set it in advance as a fixed percentage of the price, and you pay for the difference between price and residual over the contract.
Which cars depreciate the slowest?
Cars with strong reputations for reliability, low running costs and deep demand: mainstream family hatchbacks, popular SUVs and well-liked sports models with limited supply. They tend to hold 45% to 60% of value at three years, while luxury cars, low-demand engines and niche models can lose half their price in the first two years.
How can I reduce car depreciation?
Buy nearly new instead of new, choose a model with a record of strong resale, keep mileage in line with the market, service it on schedule, fix cosmetic damage early and keep the paperwork. When you sell, a complete history and a clean car from a private sale usually beat a rushed part-exchange.
What is the difference between straight-line and declining balance?
Straight-line subtracts the same amount each year, so a 30,000 car heading to 10,000 over five years drops 4,000 every year. Declining balance keeps the same percentage, so it falls 15% of whatever the car is worth that year - heavier early, lighter later. Declining balance matches the way used cars are actually priced.