FinanceCalcs
Car Depreciation Calculator
See exactly how much your car loses in value each year. Calculate resale value at any point, total depreciation, and compare how different vehicles hold their value over time.
Works for new and used vehicles — choose a standard depreciation curve or enter a custom annual rate.
Car Depreciation Calculator
Current Value: $0 | Lost: $0
Value in 0 Years: $0
- Vehicle Value
"A new car depreciates the moment you drive it off the lot. A used car already has."
-- Automotive Finance Principle
How car depreciation works
Depreciation is the loss of value a vehicle experiences over time. It is the single largest cost of car ownership — often exceeding fuel, insurance, and maintenance combined. The average new car loses about 20% of its value in the first year and roughly 15% per year thereafter.
This calculator uses a declining-balance method: each year's depreciation is calculated as a percentage of the current remaining value, not the original purchase price. This mirrors real-world behavior — a car that falls from $35,000 to $28,000 in year one loses $7,000; the same 20% applied in year two would be applied to $28,000, not $35,000.
The first-year "drive off the lot" hit is a one-time, immediate depreciation that occurs before annual depreciation begins. When a new car leaves the dealership it is no longer new — it becomes a used vehicle and loses 9–11% of its value instantly, even before the first annual depreciation cycle.
If you enter a loan balance, the calculator also tracks your equity position — whether your vehicle is worth more (positive equity) or less (underwater / negative equity) than what you owe.
lightbulb Depreciation by Vehicle Type
Not all vehicles depreciate equally. Here are typical 5-year depreciation rates used in this calculator:
| Vehicle Type | Year 1 Total* | Years 2–5 | 5-Yr Value |
|---|---|---|---|
| Average (sedan) | ~20% | ~15%/yr | ~37% |
| Truck / SUV | ~18% | ~13%/yr | ~42% |
| Luxury vehicle | ~23% | ~18%/yr | ~30% |
| Electric vehicle | ~22% | ~18%/yr | ~30% |
| Sports car | ~20% | ~15%/yr | ~37% |
*Year 1 total includes the drive-off-lot hit plus first-year annual depreciation. Actual rates vary significantly by make, model, and market conditions.
Car Depreciation FAQs
What vehicles depreciate the least?
Trucks and SUVs — particularly domestic pickups like the Ford F-150, Chevrolet Silverado, and Toyota Tacoma — historically hold their value better than most passenger cars. Certain Japanese brands (Toyota, Honda, Subaru) also show below-average depreciation. Limited production and high-demand vehicles can actually appreciate.
What vehicles depreciate the fastest?
Luxury sedans and certain European brands have historically depreciated fastest. Electric vehicles from non-premium brands have shown high depreciation in recent years, though this varies significantly by model. High MSRP combined with generous lease incentives tends to correlate with faster depreciation in the used market.
Does mileage affect depreciation?
Yes, significantly. The rates in this calculator assume average annual mileage (~12,000–15,000 miles/year). High-mileage vehicles depreciate faster; low-mileage vehicles retain value better. As a rough rule, each 10,000 miles above average reduces resale value by 1–2% of current value.
What does "underwater" on a car loan mean?
You are underwater (or have negative equity) when your loan balance exceeds the current market value of your vehicle. This commonly happens in the first 1–3 years of a new car loan when depreciation outpaces principal paydown, especially with low down payments and long loan terms. Gap insurance covers the difference if the vehicle is totaled while you're underwater.
Depreciation terminology
Declining-Balance Depreciation
A method where each year's depreciation is a fixed percentage of the remaining value, not the original cost. The dollar amount decreases each year even though the percentage stays constant. This is the most accurate model for vehicle depreciation.
Residual Value
The estimated value of a vehicle at a specific future point. Expressed either as a dollar amount or as a percentage of the original price. Residual value is used by leasing companies to set monthly lease payments — higher residuals mean lower payments.
Negative Equity (Underwater)
When you owe more on a vehicle loan than the vehicle is currently worth. Common in early loan years. Being underwater is a problem if you need to sell or trade in the vehicle before the loan is paid off.
Gap Insurance
Guaranteed Asset Protection — covers the difference between what your auto insurer pays (actual cash value) and what you still owe on the loan if the vehicle is totaled or stolen while you're underwater. Typically costs $20–$40/year and is worth carrying during the first 2–3 years of a new car loan.
Actual Cash Value (ACV)
What your insurance company pays for a totaled vehicle — its fair market value at the time of the loss, accounting for age, mileage, and condition. Not the replacement cost of a new equivalent vehicle.
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