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Car Depreciation Calculator

Updated · Written and checked by · How we check our maths

Quick answer

New cars typically lose about 20% of their value in the first year and around 15% a year after that. A $40,000 car would be worth roughly $16,700 after 5 years, a loss of about $23,300, or $4,660 a year.

Car value over time

$
years
%
%

Estimated value

$16,704

Total value lost
$23,296
Depreciation per year
$4,659
Depreciation per mile/km
$0.388
Value kept
41.8%

How this calculator works

Depreciation is usually the largest cost of owning a car, bigger than fuel or insurance, but it is invisible until you sell. Most new cars lose around a fifth of their value in the first year and then a smaller share each year after that.

This calculator applies a first-year rate, then a steady yearly rate on the remaining value. Brands, models and mileage vary widely: trucks and some popular SUVs hold value well, while luxury cars and many electric vehicles have depreciated faster.

Use it to compare buying new with buying a two- or three-year-old car. The used buyer skips the steepest part of the curve.

The formula

Value
price × (1 − first-year %) × (1 − yearly %)^(years − 1)
Per year
(price − value) ÷ years
Per mile
(price − value) ÷ (miles per year × years)

Worked example

$40,000 loses 20% in year one to $32,000, then 15% a year for four years: $32,000 × 0.85⁴ ≈ $16,700. That's about $23,300 of depreciation, $4,660 a year, or 39 cents a mile at 12,000 miles a year.

Tips

  1. 01Buying a car 2–3 years old avoids the biggest drop in value.
  2. 02Low mileage, service records and a popular colour help resale value.
  3. 03Check resale values for the exact model before buying; they vary a lot.
  4. 04Keep the car longer: depreciation slows sharply after year five, so the yearly cost of ownership falls.

Frequently asked questions

How much does a car depreciate per year?

Roughly 15–20% in the first year and around 10–15% a year after, depending on the model and mileage.

Which cars hold their value best?

Typically pickup trucks, some SUVs and models with strong reliability reputations.

Do electric cars depreciate faster?

Many have in recent years, because new models and price cuts lower used values. It varies a lot by model and battery health.

Is depreciation tax deductible?

For business vehicles in many countries, yes, under specific rules. For personal cars, no.