Car Depreciation CalculatorWhat Will My Car Be Worth? Year-by-Year Value Estimate
A common rule of thumb is that a new car loses about 20% of its value in the first year and around 15% a year after that.
Estimate how much value your car loses each year and what it will be worth when you sell. Adjust for vehicle type, mileage and condition to see the year-by-year value, total depreciation and what that loss costs you per month and per mile.
Your car
After 5 years and about 60,000 miles, keeping 42% of its purchase price.
Typical depreciationValue over time
Year-by-year depreciation schedule
| Year | Start value | Lost this year | End value | Total lost |
|---|---|---|---|---|
| Year 1 | $40,000 | $8,000 (20.0%) | $32,000 | $8,000 |
| Year 2 | $32,000 | $4,800 (15.0%) | $27,200 | $12,800 |
| Year 3 | $27,200 | $4,080 (15.0%) | $23,120 | $16,880 |
| Year 4 | $23,120 | $3,468 (15.0%) | $19,652 | $20,348 |
| Year 5 | $19,652 | $2,948 (15.0%) | $16,704 | $23,296 |
How much does a car depreciate per year?
A common rule of thumb is that a new car loses about 20% of its value in the first year and around 15% a year after that. Using that pattern, a $40,000 car is worth about $32,000 after one year and about $16,704 after five years — a loss of roughly 58%. Trucks tend to hold value better; luxury cars and many EVs tend to lose it faster.
Part of our Car Buying & Ownership calculators — for the core estimate, start with the Cost of Car Ownership Calculator.
How this car depreciation calculator works
The calculator uses a declining-balance model: each year the car loses a percentage of the value it had at the start of that year. The first year of a car’s life carries the biggest drop, so a new car is charged a higher first-year rate than a used one.
| Vehicle type | First-year rate | Later years | Why |
|---|---|---|---|
| Average car / SUV | 20% | 15% | Widely cited industry rule of thumb |
| Economy / compact | 18% | 13% | Strong used-car demand |
| Pickup truck | 15% | 12% | Durable demand from work and towing buyers |
| Luxury | 25% | 17% | High price and fast-moving technology |
| Electric vehicle | 25% | 16% | Rapid model updates and price cuts |
Mileage adjusts the rate by 0.4 percentage points for every 1,000 miles above or below 12,000 a year, and your selected condition adjusts the final value by +5% (excellent) or −10% (fair). These are planning assumptions, not appraisals.
Car depreciation formula
Value after n years = price × (1 − r₁) × (1 − r₂) × … × (1 − rₙ)
Total depreciation = purchase price − value when you sell
Depreciation per month = total depreciation ÷ months owned
Depreciation per mile = total depreciation ÷ miles driven
Example: a $40,000 new car over five years
| Year | Rate | End value | Total lost |
|---|---|---|---|
| 1 | 20% | $32,000 | $8,000 |
| 2 | 15% | $27,200 | $12,800 |
| 3 | 15% | $23,120 | $16,880 |
| 4 | 15% | $19,652 | $20,348 |
| 5 | 15% | $16,704 | $23,296 |
That’s $23,296 lost, about $388 a month or $0.39 per mile at 12,000 miles a year. These numbers match the calculator’s defaults.
What makes a car depreciate faster or slower
Faster depreciation
- High mileage for its age
- Accident history or poor condition
- Luxury brands with costly repairs
- Models with frequent price cuts or redesigns
- Unpopular colors or options
Slower depreciation
- Strong reputation for reliability
- Trucks and popular SUVs
- Low mileage and full service records
- Limited supply or high used demand
- Buying lightly used instead of new
Depreciation is usually the biggest single cost of owning a car; see it next to fuel, insurance and interest in the Cost of Car Ownership Calculator.
Depreciation for taxes is different
This tool estimates market value. If you use a vehicle for business, tax depreciation follows separate IRS rules (MACRS, Section 179 and annual luxury-auto limits) explained in IRS Publication 946 and Publication 463. Those rules decide your deduction, not the car’s resale value.
Before you buy, check the price fits your income with the Car Affordability Calculator and add your state’s tax with the Car Sales Tax Calculator.
Related calculators
Car Depreciation Calculator FAQs
A common estimate is about 20% in the first year and roughly 15% each year after, though it varies widely by brand, model, mileage and condition.
Using 20% then 15% a year, a new car keeps about 42% of its price after five years, losing roughly 58%.
Multiply the value at the start of each year by one minus that year’s depreciation rate. Repeat for each year you own the car, then subtract the final value from the purchase price.
Pickup trucks, popular SUVs and models with strong reliability reputations tend to hold value best. Luxury cars and models with frequent price cuts tend to lose value fastest.
Yes. Higher mileage for a car’s age generally lowers its value; low mileage helps it hold value.
Many EVs have depreciated faster than comparable gas cars because of rapid technology changes and new-car price cuts, though this varies by model.
Buying a car a few years old avoids the steepest first-year loss, so used cars usually lose less value in dollar terms.
It’s when you owe more on your loan than the car is worth, usually because the car depreciated faster than you paid down the loan.
Usually. Lower depreciation means more money back when you sell and less risk of owing more than the car is worth, though it often comes with a higher purchase price.
About the developer
Manzoor Ahmad
Web Designer & Calculator Developer · 13+ years of web development and SEO experienceI’m a professional pharmacist turned tech geek, and I designed and coded this car depreciation calculator myself. Depreciation can’t be predicted exactly, so instead of pretending, I show the exact rates and adjustments the tool uses, so you can swap in figures from a valuation guide.
Found a number that looks wrong, or want a feature added? Tell me through my author page — corrections are fixed and re-dated.
Sources
- Federal Trade Commission — Buying a new car
- Consumer Financial Protection Bureau — Auto loans: key terms and shopping tips
- Internal Revenue Service — Publication 946: How to depreciate property
- Internal Revenue Service — Publication 463: Car expenses
Disclaimer: Values are estimates based on general depreciation patterns, not appraisals. Actual market value depends on make, model, trim, location, condition, history and market conditions. Check a valuation guide or dealer quotes before buying or selling.
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