Car Depreciation Calculator

What this calculator does

Estimate what your car will be worth in a few years, and how much value it loses along the way. That loss is called depreciation. It's often the biggest cost of owning a car, even though you never write a check for it. It's the gap between what you paid and what the car would sell for later. Cars tend to lose value fastest in the first year, then more slowly. Each year's drop is a percentage of what's left, not a fixed dollar amount.

This calculator follows that pattern. In the first mode, enter the price, a first-year depreciation percent and a percent for every later year. It projects the value at the end of each year. In the second mode, enter what you paid and what the car is worth now. It works out the steady yearly rate that links the two. The rates are your own guesses, so check listings for similar cars to choose realistic ones.

Where it's used

Why this math matters outside the classroom:

• Estimating resale value. A $30,000 car that loses 20% in year one and 15% in each later year is worth about $17,340 after three years.
• Buying new or used. Shoppers compare how much value a car loses in its first year with how much it loses in later years.
• Loan versus value. Owners estimate a car's current value to see how it compares with the balance still owed on the loan.
• Algebra 1 lessons. Students model value as a starting price times a constant factor below 1 raised to the number of years.

Grade level and standards: Grades 9–10; Common Core State Standards for Mathematics HSF.LE.A.2. © Copyright 2010. National Governors Association Center for Best Practices and Council of Chief State School Officers. All rights reserved.

How to use it

1. Choose whether to estimate a future value, or to find the yearly rate from a value you already know.
2. Enter the purchase price and the number of years owned.
3. Enter a first-year rate and a later-year rate, or enter the car's value now.
4. Read the estimated value or yearly rate, the total value lost and the year-by-year table.

What the inputs mean

First-year depreciation

The share of the price lost in the first year. The default of 20% is only an example. Real drops vary widely by model, mileage and market.

Depreciation each later year

The share of the remaining value lost in each year after the first. The default of 15% is also just a starting point to replace with your own figure.

Value now

A realistic sale value today. For example, use a trade-in offer or the asking prices of similar cars nearby.

Formula and method

value after year 1 = price × (1 − r₁)
value after n years = price × (1 − r₁) × (1 − r)^(n − 1)
depreciation = price − value
yearly rate from a known value = 1 − (value ÷ price)^(1 ÷ n)

r₁ is the first-year rate and r is the rate for each later year, both as decimals (0.20 for 20%). n is the number of years. Each year the car keeps a fixed share of the value it had at the start of that year. This is called the declining-balance pattern. The dollar loss gets smaller every year, even though the percentage stays the same.

The rate mode turns the idea around, using one steady rate. Say a car kept a share s of its price over n years. The yearly rate that gives exactly that is 1 − s^(1/n). It's an average, since real cars usually lose more early on and less later.

Worked example

You buy a car for $36,000 and assume it loses 20% in the first year and 15% a year after that, and you plan to keep it 5 years.

1. After year 1: $36,000 × (1 − 0.20) = $28,800.
2. After year 2: $28,800 × 0.85 = $24,480; after year 3: $20,808.
3. After 5 years: $28,800 × 0.85⁴ ≈ $15,033.78.
4. Depreciation: $36,000 − $15,033.78 = $20,966.22, or about 58.2% of the price.

Result: With these guesses, the car is worth about $15,033.78 after 5 years. That's an average loss of about $4,193.24 a year. Now say a similar car bought for $36,000 sells for $21,000 after 5 years. The steady rate that matches is about 10.22% a year.

Understanding the result

The yearly table shows that the biggest dollar losses come early. That's why keeping a car longer usually spreads depreciation over more years and lowers the average cost per year.

Use the rate mode with real numbers from listings to fine-tune the first mode. Comparing the rates for different models can show which ones tend to hold their value better in your area.

Assumptions and limitations

• The car loses a fixed percent of its remaining value each year after the first.
• Values are at the end of each whole year of ownership.
• Inflation, mileage and condition only show up through the rates you choose.
• The rates are assumptions, not forecasts. Market swings, a model's reputation, accidents and mileage can push real values far from any steady pattern.
• The rate mode gives one average rate. It can't separate a steep first year from gentler later years.
• Sale prices differ between private sales, trade-ins and dealer listings. Use the kind of value that matches your plans.

Frequently asked questions

How this calculator is checked

Method: Declining-balance depreciation with a separate first-year rate: V = P(1 − r₁)(1 − r)^(n − 1); implied steady rate r = 1 − (V/P)^(1/n). The calculation is covered by automated tests with known reference values and edge cases. Last updated 2026-10-18. Found a problem? Tell us.

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