How to use the car depreciation calculator
- Enter the price you paid or the car’s value today.
- Enter the car’s age today. For a new car, use 0 so the larger first-year drop applies.
- Choose how many years ahead you want to look.
- Set the first-year and later-year rates. For a used car the first-year rate is skipped automatically.
- Read the value at the end and scroll the table to see every year.
How the depreciation is worked out
Rate = first-year % if it is the car’s first year of life, otherwise the later-year %
Total depreciation = price − value at the end
This declining-balance curve matches the usual pattern for cars: the biggest loss comes early and the yearly loss in money shrinks as the car ages. The default 20% and 15% are planning assumptions, not market data; real rates depend on the model, mileage, condition and demand, so compare listings for the same car at different ages and adjust them.
Worked example
A new car bought for $35,000, kept for 5 years, losing 20% in its first year and 15% in each year after that:
- After year 1: $35,000 × 0.80 = $28,000.
- After years 2 to 5: $28,000 × 0.854 = $14,616.18.
- Total depreciation: $20,383.82, which is 58.2% of the price.
- Spread out, that is $4,076.76 a year or $339.73 a month.
Tips to lose less value
- Buy nearly new. A car one to three years old has already taken its biggest drop.
- Keep the records. A full service history and two keys help a car sell for more.
- Mileage matters. Cars driven far above average lose value faster than the same model driven gently.
- Popular colours and trims sell faster. Unusual options rarely add as much at resale as they cost new.
- Time the sale. Selling just before a big service, a new tyre set or a model change can save money that the buyer would otherwise discount from the price.
- Check real prices. Listings and dealer valuations for your exact model are the best guide to the rates to use.
US, UK and Canada differences
In the US and Canada, valuation guides and dealer appraisals are widely used to price used cars, and higher typical annual mileages mean mileage adjustments matter a lot. In the UK, values are often looked up by registration plate on valuation sites, and the plate’s age identifier makes the car’s age easy to see. The maths is the same everywhere; only the rates differ. Fleet and company cars often come onto the used market in large numbers at three years old, which can push those prices down in all three countries.
Metric units and other countries
Depreciation is a percentage, so the calculator works in any currency. In markets where new-car supply is limited or prices rise with inflation, such as Pakistan in recent years, used cars can hold their value unusually well; lower the rates to match the prices you see in local listings.