How fast do cars depreciate?

A new car often loses around 15% to 20% of its value each year, with the biggest drop in the first year. Used cars depreciate more slowly. The exact rate depends on the make, condition, mileage, and demand, so treat the result as a guide.

What is the declining balance method?

Declining balance applies the depreciation rate to the value left each year, not the original price. So the dollar loss is largest at the start and shrinks as the car ages, which matches how real vehicle values behave.

Why does depreciation matter?

Depreciation is usually the biggest cost of owning a car, often more than fuel or servicing. Knowing the likely resale value helps you compare cars, decide when to sell, and understand the true cost of buying new versus used.

Car Depreciation Calculator

See how much value your car loses over time. Enter the purchase price, an annual depreciation rate, and the number of years, and the calculator shows the future value, the total value lost, and a year by year table. It uses the declining balance method, which matches how real car values fall fastest early on.

Purchase price

Depreciation per year

Years

estimated value after the period

Total lost$0

First year loss$0

Year by year value

End of year	Value	Lost that year

How it works

The declining balance method multiplies the value left at the start of each year by the depreciation rate. So a car worth $35,000 losing 18% drops $6,300 in the first year to $28,700, then loses 18% of $28,700 the next year, and so on. The dollar loss shrinks each year even though the rate stays the same.

Related calculators

Depreciation Calculator: straight line and diminishing value.
Car Loan Calculator: finance repayments.
Fuel Cost Calculator: running cost by distance.
Rent vs Buy Calculator: compare ownership costs.

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