Car Depreciation Calculator
Find out how much your vehicle is worth each year as it depreciates — and how much value it will retain at the end of your ownership period.
New cars typically lose 20–30% in year 1.
Most vehicles: 10–20% per year after year 1.
| Year | Rate | Value Lost | Resale Value | % Retained |
|---|
How Car Depreciation Works
Depreciation is the single largest cost of car ownership — yet most buyers focus only on the purchase price or monthly payment. Understanding depreciation helps you buy smarter, sell at the right time, and choose vehicles that hold their value.
The New Car Depreciation Curve
New vehicles lose value fastest in the first few years. The moment you drive off the lot, the car is no longer "new" and its value drops immediately. Typical depreciation rates for mainstream vehicles:
- Year 1: 20–30% (the "new car premium" evaporates)
- Year 2–3: 15–20% per year
- Year 4–5: 10–15% per year
- Year 6+: 8–12% per year, flattening out
After 5 years, the average vehicle retains about 40–50% of its original MSRP. Some vehicles hold value much better; others much worse.
Vehicles That Hold Value Best
Certain brands and models consistently outperform average depreciation:
- Trucks and SUVs (Toyota 4Runner, Toyota Tacoma, Ford F-150) — High demand keeps resale values strong
- Toyota and Honda — Reputation for reliability drives strong used demand
- Luxury vehicles often depreciate faster than average, making them excellent used car buys
Why Depreciation Matters for Financing
If you buy a $35,000 car and finance it for 72 months, you'll be underwater (owing more than it's worth) for the first 2–3 years. If you need to sell or trade early, you could owe thousands more than the car is worth.
Frequently Asked Questions
When is the best time to sell a car?
Between 3–5 years of ownership, before the largest per-year losses accumulate. Many depreciation curves flatten after year 5, so holding longer becomes relatively less costly.
Do electric vehicles depreciate differently?
Currently, EVs depreciate faster than the average ICE vehicle due to rapidly improving battery technology and new model competition. This is changing as EV adoption grows and the technology matures.
What's the best way to minimize depreciation loss?
Buy a used vehicle that's 2–3 years old. You let the first owner absorb the steepest depreciation, while still getting most of the vehicle's useful life.
