Car Depreciation Calculator
A new car loses the largest share of its value in the first year and keeps falling after. This calculator draws that curve: enter the price and it estimates the car’s resale value at the end of each year, and the total value it has shed.
Depreciation is the single biggest cost of owning most cars, yet it never shows up as a payment. Seeing the curve helps you decide when to buy (letting someone else take the first-year hit), how long to keep a car, and what it should be worth when you sell.
Calculator
Value after 5 years
$22,000
$18,000 lost · 45% of its value
| Year | Value | Value lost |
|---|---|---|
| New | $40,000 | — |
| Year 1 | $32,000 | $8,000 |
| Year 2 | $29,139 | $10,861 |
| Year 3 | $26,533 | $13,467 |
| Year 4 | $24,160 | $15,840 |
| Year 5 | $22,000 | $18,000 |
Calculation Formulas
The first year takes the largest hit (default 20%).
A steady annual retention r is solved so the car matches the chosen 5-year loss (default 45%).
Key Figures
| Figure | Value | Description |
|---|---|---|
| First-year drop | ~20% | Typical new-vehicle first-year depreciation. |
| 5-year drop | ~45% | Typical total value lost over five years; varies widely by model. |
Note: Results are estimates for planning purposes. Rates, fees, taxes, and insurance vary by lender and location — confirm exact figures with a licensed professional before making financial decisions.
Standards & Sources
Last verified: November 2026
- Industry residual-value studies
Depreciation rates vary widely by make, model, mileage and condition; this tool uses mainstream averages you can override.
How to use this calculator
- Enter the purchase price of the vehicle.
- Choose how many years out you want to project the value.
- Adjust the first-year and five-year depreciation rates if you know your model holds value unusually well or poorly.
- Read the resale value and value lost for each year, shown as a curve and a table.
Frequently Asked Questions
How much does a car depreciate per year?
Most new cars lose about 20% in the first year, then a smaller, steady share each year after — roughly 45% of the original value gone by year five. Exact rates vary widely by model.
Which cars hold their value best?
Reliable, in-demand models with limited supply depreciate more slowly. The calculator lets you lower the depreciation rates for a model known to hold value, or raise them for one that drops fast.
Is it cheaper to buy a one- or two-year-old car?
Often yes. Letting the first owner absorb the steep first-year drop means you buy a nearly-new car after its largest depreciation hit has already happened.
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