Car Depreciation Calculator
Standard Sedan (15% avg)
Luxury Vehicle (20% avg)
SUV / Truck (12% avg)
Electric Vehicle (18% avg)
Excellent
Good (Slightly higher wear)
Fair (Higher depreciation)
Understanding Car Depreciation
Car depreciation is the difference between the amount you spent when you bought your vehicle and the amount you get back when you sell or trade it in. For most consumers, depreciation is the single largest cost of owning a new vehicle, often exceeding the cost of fuel, insurance, or maintenance.
How This Calculator Works
Our Car Depreciation Calculator uses the declining balance method. This reflects the reality that cars lose a larger dollar amount in their first few years than in later years. The formula used is:
V = P(1 – R)n
V = Current Value | P = Purchase Price | R = Annual Depreciation Rate | n = Number of Years
V = Current Value | P = Purchase Price | R = Annual Depreciation Rate | n = Number of Years
Average Depreciation Rates by Category
- Standard Sedans: Typically lose about 15% of their value annually.
- Luxury Vehicles: Often see steeper declines, sometimes 20-25% per year, due to high maintenance costs and rapid technology shifts.
- Trucks and SUVs: These tend to hold their value better, depreciating at roughly 10-12% per year due to high demand in the used market.
- Electric Vehicles (EVs): Currently experience slightly higher depreciation (approx 18%) as battery technology evolves rapidly.
Real-World Example
If you purchase a Standard Sedan for $30,000 and keep it for 3 years at a 15% annual depreciation rate:
- Year 1: $30,000 – 15% = $25,500
- Year 2: $25,500 – 15% = $21,675
- Year 3: $21,675 – 15% = $18,423.75
Total value lost over 3 years: $11,576.25.
How to Minimize Your Vehicle's Depreciation
While you cannot stop depreciation entirely, you can slow the process by following these steps:
- Keep Mileage Low: The average car travels 12,000 to 15,000 miles per year. Exceeding this significantly drops the resale value.
- Regular Maintenance: Keep a detailed log of all oil changes, tire rotations, and brake services. A well-documented service history proves to buyers the car was cared for.
- Choose Popular Colors: Neutral colors like white, black, and silver are easier to resell than "statement" colors like bright orange or purple.
- Protect the Interior: Avoid smoking in the car and use floor mats to protect the carpet from permanent stains and odors.