Car Depreciation Calculator
How much will your car be worth? Project future resale value, visualise the full depreciation curve, and compare two models to see which holds value better.
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How to Use This Calculator
Tab "Future Value"
Enter the purchase price and the car's age at purchase (new, 1 year, 3 years, or 5 years old). The calculator projects the car's value at years 1, 3, 5, 7, and 10 from your purchase date using a standard industry depreciation curve. You can also enable a custom annual depreciation rate if you know your specific vehicle depreciates faster or slower than average.
Tab "Depreciation Curve"
Enter the new car purchase price to see a full year-by-year table of value decline over 10 years. The steepest drop zone (years 0-3) is highlighted in the table, showing where new cars lose value fastest. Use this to understand why buying at 3 years old avoids the worst depreciation.
Tab "Compare Models"
Enter two cars with different prices and different annual depreciation rates. The comparison shows which car loses less value in absolute terms at years 1, 3, 5, 7, and 10 — helping you decide which vehicle has lower total cost of ownership from a depreciation standpoint.
The Formulas
Value at Year N = Purchase Price × (1 − Rate_Year1) × (1 − Rate_Year2) × … × (1 − Rate_YearN)
Standard annual depreciation rates:
Year 0 → 1: −20% | Year 1 → 2: −15% | Year 2 → 3: −12%
Year 3 → 5: −10%/year | Year 5 → 10: −7%/year | After 10: −5%/year
Future value (flat custom rate):
Value = Purchase Price × (1 − Annual Rate)^Years
Total depreciation:
Total Loss = Purchase Price − Value at Year N
Retained value percentage:
Retained% = (Value at Year N / Purchase Price) × 100
The standard curve reflects industry-average data. Individual vehicles may depreciate faster (luxury, high-mileage) or slower (trucks, reliability leaders). Use the custom rate option or Compare tab for specific models.
Worked Examples
Example 1 — New $40,000 car: 10-year depreciation
A buyer purchases a brand-new car for $40,000 and wants to know its value at key milestones using the standard depreciation curve.
The steepest drop happens in years 1-3: the car loses $16,064 (40%) in just 3 years. After year 5 the rate slows considerably. This pattern is why financial advisers often recommend buying 3-year-old used cars.
Example 2 — Buy at 3 years old ($24,000) vs new ($40,000)
Comparing the depreciation cost of buying the same model new versus buying a 3-year-old version of it at $24,000.
The used buyer loses only $5,190 in depreciation over 3 years of ownership, compared to $16,064 for the new buyer — saving roughly $11,300 in depreciation alone. The used car also costs $16,000 less upfront.
Example 3 — Luxury $80,000 vs Economy $25,000: 5-year comparison
A luxury car at $80,000 (18% annual depreciation) versus an economy car at $25,000 (12% annual depreciation) — which costs more in lost value?
| Year | Luxury ($80K, 18%/yr) | Economy ($25K, 12%/yr) |
|---|---|---|
| 0 (new) | $80,000 | $25,000 |
| 1 | $65,600 | $22,000 |
| 3 | $44,117 | $17,037 |
| 5 | $29,672 | $13,182 |
| Loss at 5 yr | −$50,328 | −$11,818 |
The luxury car loses over $50,000 in 5 years — more than double the entire purchase price of the economy car. Even though the luxury car has a higher percentage rate (18% vs 12%), the absolute dollar loss is dominated by the much higher starting price. The economy car loses only $11,818 over the same period.
Understanding Car Depreciation
Why Cars Depreciate Fastest in Year 1
The moment a new car is driven off the lot, it becomes "used." This classification change alone accounts for a large portion of the 20% first-year drop. Additionally, new model years are released annually, immediately making the current model one year old in the market's eyes. Supply of nearly-new used cars also creates downward price pressure.
The "Sweet Spot" for Buying Used
Most financial experts recommend buying a car that is 2-3 years old. At this age, the vehicle has already absorbed 40-50% of its total lifetime depreciation, but it still has many years of reliable service ahead. Modern cars routinely last 10-15 years with proper maintenance, making a 3-year-old car a strong value proposition.
Factors That Affect Depreciation
Brand reputation: Toyota, Honda, and Subaru tend to hold value well. Luxury brands like BMW and Mercedes depreciate faster in percentage terms. Mileage: Higher-than-average mileage accelerates depreciation. Condition: Accident history and maintenance records significantly impact resale value. Market demand: Trucks and SUVs often hold value better than sedans in many markets.
Electric Vehicle Depreciation
EVs have historically depreciated faster than petrol cars due to rapid technology improvements and range anxiety concerns. However, this gap is narrowing as EV adoption grows. Battery degradation and the availability of newer models with longer range remain factors that affect EV resale values.
Frequently Asked Questions
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