How does the Car Depreciation Calculator work?
This tool applies the same percentage decline to the remaining vehicle value each year. The estimated value after the selected period equals the starting value multiplied by (1 − annual rate) raised to the number of years. That is a compound-depreciation model, so the dollar loss becomes smaller as the modeled value decreases.
It is a scenario tool, not a vehicle appraisal. Actual resale value depends on make, model, trim, mileage, condition, accident history, local demand, incentives and the used-vehicle market.
How should you choose a depreciation rate?
There is no single depreciation percentage that accurately describes every vehicle. New vehicles can lose value differently from older vehicles, and individual models can retain value much better or worse than an average. Use a rate that reflects the scenario you want to test, then compare several rates to see how sensitive the result is.
If you already know a current market value, you can use that as the starting value instead of the original purchase price and project forward from today.
Why does depreciation matter in vehicle ownership cost?
Depreciation is often a major non-cash cost of owning a vehicle because it represents the reduction in resale value while you own it. A low monthly loan payment does not mean the vehicle is inexpensive to own if value declines rapidly or operating costs are high. If you are deciding what purchase price fits a payment target, the Car Affordability Calculator can model the financing side separately.
Use the Vehicle Ownership Cost Calculator when you want to combine depreciation with fuel, insurance, maintenance and other annual expenses. To express those costs against annual driving, the Cost Per Mile Calculator provides a per-mile view.
What the depreciation estimate does not predict
The calculator does not forecast future used-car markets, dealer trade-in offers, tax treatment, lease residuals or repair-related value changes. For a lease-specific residual and payment scenario, use the Auto Lease Calculator. Treat the estimated value as a mathematical scenario. For a transaction, compare current market data and vehicle-specific condition information.
Frequently asked questions about Car Depreciation
Estimated value equals starting value multiplied by (1 minus the annual depreciation rate) raised to the number of years.
Not necessarily. The calculator uses a constant percentage for a simple scenario, while real vehicles can depreciate at different rates from year to year.
Yes. Enter the value you want to use as the starting point and project depreciation forward from there.
Mileage can affect real market value, but this calculator does not model mileage separately.
No. Dealer trade-in offers can differ from retail or private-party values and depend on vehicle-specific market conditions.
Some collectible or unusual vehicles can rise in value, but this calculator is designed for depreciation scenarios using a nonnegative annual rate.
Value lost during ownership is an economic cost even though it is not paid at the fuel pump or repair shop.
No. Depreciation models vehicle value. Loan balance and financing are separate financial calculations.
Sources and methodology
The calculator uses the formulas described on this page and user-entered assumptions. These authoritative U.S. resources provide context for the related vehicle, fuel, charging, finance or safety topic.