Car Depreciation Calculator

What is car depreciation

Depreciation is the loss of a vehicle's market value over time due to wear, aging technology, and reduced demand for used cars of a certain age. It's one of the biggest "hidden" costs of car ownership.

Typical depreciation curve

• First year: the biggest drop — typically 20-25% of value (the "driving off the lot" effect).
• Years 2-3: the pace slows but remains significant — roughly 15-18% per year.
• Years 4-5: further slowdown, roughly 10-12% per year.
• After 5 years: the depreciation rate stabilizes at a lower level.

What affects depreciation speed

• Make and model: premium brands (Toyota, Lexus) often hold value better than average brands.
• Mileage: higher mileage accelerates depreciation beyond the base age factor.
• Powertrain type: electric vehicles may have a different depreciation curve due to rapid battery technology advances.
• Used market popularity: a model with high demand in used condition depreciates more slowly.
• Condition and maintenance: a well-maintained car with a full service history retains more value.

Why knowing the depreciation curve matters

Understanding how fast a car loses value helps you make smarter decisions: whether to buy new or a 2-3 year old used car (which has already passed the steepest depreciation phase); the best time to sell; whether leasing instead of buying makes more sense if rapid depreciation makes ownership less advantageous.

The calculation is based on typical average depreciation rates. The actual value of a specific car depends on many individual factors and may differ significantly from the estimate.