Estimate how much value your car loses over time. Enter the purchase price, annual depreciation rate, and number of years to see the projected resale value and total depreciation, year by year.
Value lost over time
| Year | Depreciation | Value | % Retained |
|---|
Depreciation is the loss in a vehicle's value over time, and it's usually a car owner's single biggest cost — bigger than fuel, insurance, or maintenance. New cars depreciate fastest: a typical vehicle loses around 20% in the first year and roughly 15% per year after that, leaving most cars worth only about 40% of their original price after five years. The value each year is the previous value multiplied by (1 − depreciation rate).
Depreciation rates vary widely by make, model, mileage, and condition — luxury cars and EVs often depreciate faster, while some trucks and reliable brands hold value better. This calculator uses a steady annual rate so you can model resale value and total loss over your ownership period. Buying a 2–3 year old car lets someone else absorb the steepest early depreciation, which is why used cars are often the better financial deal.
New cars typically lose about a fifth of their value the moment they leave the lot and through year one.
Roughly 15% per year afterward — most cars are worth about 40% of the sticker price after five years.
A 2–3 year old car has already taken the biggest depreciation hit, often making it the smarter buy.
Depreciation is the largest cost of owning a new car and the one buyers most consistently overlook, because it never appears as a bill. The pattern is front-loaded and steep: a new vehicle typically loses 15–25% in its first year — a substantial part of that in the first minutes, as it converts from new to used — and then roughly 12–18% of remaining value each year after. Compounding a percentage loss means value approaches zero without ever reaching it, which is why the curve flattens. The practical consequence is that buying at two to three years old avoids the steepest part of the curve entirely.
Value after year 1 = Price × (1 − first-year rate)Value after n years = Price × (1 − y1) × (1 − r)^(n − 1)Total depreciation = Price − Valuewhere:
Assumptions: Averages only. Actual depreciation varies enormously by make, model, condition, mileage and market conditions; some models hold value far better than any general rate predicts.
Apply a 20% first-year loss then 15% a year, and compare with running costs.
Result$24,461 lost over five years — $408 a month
That $408 a month typically exceeds fuel and insurance combined, yet never appears in a monthly budget. Buying the same car at three years old costs $24,276 and loses about $6,700 over the following two years — roughly a quarter of the depreciation the first owner absorbed.