Car Depreciation Calculator
What a car will be worth after years of typical depreciation.
Input sheet
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Depreciation is the biggest cost of owning a car — bigger than fuel or insurance for most new vehicles — and it happens silently, off the receipts. This calculator projects what a car will be worth after a chosen number of years at a steady annual decline.
How it works
Value = price × (1 − rate)^years — each year the car keeps the same fraction of the prior year's value. 15%/yr approximates the average curve after the steep first year.
The model is exponential decay: each year the car keeps the same fraction of the previous year's value. At the default 15%, a car retains 85% each year, compounding downward — which matches the real curve reasonably well after the steep first year.
Real-world depreciation is front-loaded: a new car sheds roughly 20% the moment it becomes 'used' plus its first-year miles, then settles into 10–15% annually. If you are modeling a brand-new purchase precisely, run year one at 20% and the rest at 15%, or just accept the flat rate as a fair average.
Future value = purchase price × (1 − annual rate)^years. Value lost = price − future value.
Worked examples
A $35,000 car held 5 years at 15% per year. → Worth about $15,530 — $19,470 gone.
0.85⁵ ≈ 0.444, so the car keeps 44.4% of its price: 35,000 × 0.444 ≈ $15,530.
A $45,000 SUV traded after 3 years. → About $27,636 residual.
0.85³ ≈ 0.614; 45,000 × 0.614 ≈ $27,636 — nearly $17,400 of cost in 3 years.
Tips & gotchas
- Buying a 2–3 year old car lets the first owner absorb the steepest part of the curve — the single biggest lever on total cost of ownership.
- Depreciation per year is the number to compare against a lease payment; sometimes the lease is genuinely cheaper than the value you'd burn owning.
- Mileage and condition move the curve: high annual miles, accident history, or an unpopular color all push the real rate above the average.
FAQ
Which cars depreciate slowest?
Trucks and reliable Japanese brands historically hold value best; luxury sedans and EVs with fast-moving tech tend to fall hardest.
What rate should I use?
15% per year approximates the average car after year one. Fast-depreciating segments (luxury sedans, first-gen EVs) run 18–20%+; strong holders (trucks, popular Japanese models) can be closer to 10%.
Is depreciation an actual expense?
Yes — it is the gap between what you paid and what you get back at sale or trade-in, spread over your ownership. It just doesn't show up until the day you sell.
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