Car Depreciation Calculator
See how quickly your car loses value: enter the purchase price, annual depreciation rate, and number of years to get the residual value, total loss, and a year-by-year chart.
%
years
Depreciation method
%
Estimated market value based on the chosen depreciation method
- 1
Annual retention factor
1 − 15% = 0.85 - 2
Cumulative retention (5 years)
0.85ⁿ (n = 5) = 0.443705Each year the car retains this fraction of the previous year's value. - 3
Value after 5 years
25,000 × 0.443705 = 11,093
How does this calculator work?
Car value after t years ≈ Purchase price × (1 − r)^t using declining-balance depreciation, where r is the annual depreciation rate. New cars typically lose 15–20% in year one; after five years at 15% per year, roughly 44% of purchase price remains. First-year loss and total depreciation are shown alongside a year-by-year chart.
Formula
How this is calculated
Cars depreciate faster than almost any other asset. The most realistic model is the declining-balance method, where the car loses a fixed percentage of its current value each year — so the absolute loss is large in year one and shrinks over time. A £25,000 car at 15% annual depreciation is worth about £21,250 after one year (loss: £3,750), then about £18,063 after two years (loss: £3,188), and so on. After five years it retains roughly 44% of its purchase price.
The straight-line method instead deducts the same cash amount every year — useful for accountancy purposes and for comparing total losses over a fixed period, but less realistic for resale value estimation. In practice, the first year is usually the steepest drop (often 15–25% for new cars as they transition to second-hand market pricing), and the rate flattens for older vehicles.
The residual floor prevents the value from falling below a minimum scrap or trade-in floor — enter 5–10% if you want to model a realistic floor. Typical depreciation rates vary widely by brand and segment: luxury cars often depreciate faster; some models (classic, certain electrics) may hold value better. The rates in this calculator are editable estimates — use a vehicle valuation service for a specific model's actual market value.
Frequently asked questions
New cars typically lose 15–25% of their value in the first year. This is the steepest single-year drop because the car moves from the new to the used market. Some popular models depreciate less; luxury or niche vehicles often more.
The declining-balance method better reflects real used-car markets, where the biggest losses happen early. Straight-line depreciation is mainly used in business accounts for tax purposes. For estimating what your car is actually worth to sell, use declining balance and cross-check with a current car valuation service.
No — the calculator models theoretical time-based depreciation only. Actual resale values are heavily influenced by mileage, service history, colour, options, and local market demand. High mileage typically accelerates depreciation significantly beyond the percentage used here.
Also known as
TG we-Calculate Editorial Team. (2026). Car Depreciation Calculator [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/car-depreciation-calculator
TG we-Calculate Editorial Team. "Car Depreciation Calculator." TG we-Calculate. 2026. https://we-calculate.com/calculator/car-depreciation-calculator.
TG we-Calculate Editorial Team, "Car Depreciation Calculator," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/car-depreciation-calculator
@misc{wecalculate_car_depreciation_calculator, title = {Car Depreciation Calculator}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/car-depreciation-calculator}}, year = {2026}, note = {TG we-Calculate} }
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