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Car depreciation calculator
Depreciation is the quiet cost of running a car.
Depreciation is the gap between what you pay for a car and what it is worth later, and for most drivers it is the single biggest cost of motoring, larger than fuel or servicing.
It is the difference between what you pay for a vehicle and what it is worth when you come to sell it, and for most drivers it dwarfs fuel, insurance and servicing put together. A car that cost 30,000 and sells for 13,000 five years later has cost 17,000 in lost value alone, which works out at more than 3,000 a year before a single litre of fuel goes in. This tool estimates that loss using the declining-balance method: the car sheds a set percentage of its remaining value each year, so the cash drop is largest in the first year and gets smaller as the value falls. Enter the purchase price, the average yearly rate you expect, and how long you plan to keep the car, and it returns the projected value at the end, the total lost to depreciation, the share of the price retained, and the average loss for each year you own it. The rate matters more than anything else. Brand, model, fuel type, mileage and condition all push it around, and a desirable model that holds its value can cost far less to own than a cheaper car that drops like a stone. Use the figure to compare two cars you are weighing up, to decide how long to keep one, or to see why buying a year-old car can save thousands over buying new.
How it works
- Enter the price you paid, or expect to pay, for the car.
- Set the average depreciation rate per year; 15 to 20 percent is a common middle for ordinary cars.
- Choose how many years you plan to own it.
- The tool applies the rate to the remaining value each year, so the loss is steepest at the start.
- It then shows the end value, the total drop, the percentage of the price kept, and the average loss a year.
value = price x (1 - rate)^years
The calculator multiplies the price by one minus the annual rate, raised to the number of years. Each year the car keeps the same fraction of what it was worth the year before, so value falls along a curve that is steep at first and flattens later. Total depreciation is the price minus the end value, the retained share is the end value divided by the price, and the average annual loss spreads the total drop evenly across the years for an at-a-glance figure.
- price
- the purchase price of the car
- rate
- average value lost each year, as a fraction
- years
- how long you keep the car
- value
- estimated worth at the end of the period
Roughly how much value a typical new car keeps
| After 1 year | about 75 to 85% | the steepest single drop |
| After 3 years | about 50 to 60% | the usual end of a finance or lease deal |
| After 5 years | about 40% | a common point to sell on |
| After 10 years | about 10 to 20% | the value flattens near the end |
Worked example
You buy a car for 30,000 and expect it to lose 15 percent a year over 5 years: after five years the value works out at about 13,311, so 16,689 has gone in depreciation, you have kept roughly 44 percent of the price, and the average loss is about 3,338 a year. The first year alone removes around 4,500, while the fifth year removes under 2,400, because each loss is taken from a smaller remaining value. Push the rate to 20 percent and the car is worth about 9,830 instead, a reminder that the rate drives the result far more than the starting price.
Key facts
- For most drivers depreciation is the single largest cost of owning a car, ahead of fuel and servicing.
- The declining-balance method front-loads the loss, so the first year is the most expensive.
- The annual rate, set by make, model and demand, drives the result far more than the price.
- Buying a car one or two years old skips the steepest part of the curve.
Tips
- Where you can, get a real resale estimate for the exact model and work the rate back from it.
- Compare two cars on total depreciation, not just sticker price; the cheaper car can cost more to own.
- Keep full service history and reasonable mileage to protect the resale value.
- Holding a car longer lowers the average yearly loss, since later years shed less cash.
Frequently asked questions
What depreciation rate should I use?+
For an ordinary petrol or diesel car, 15 to 20 percent a year is a reasonable average. Models known for holding value can sit nearer 10 to 12 percent, while cars that fall fast, including some with high list prices or short-lived demand, can run at 25 percent or more. If you have a real resale estimate, work the rate backwards from it.
Why is the first year the worst?+
A new car loses the new-car premium the moment it is registered and becomes a used car. The declining-balance method captures this by taking the largest percentage cut from the highest value, so the cash loss is front-loaded even though the percentage is the same each year.
Does this work for electric cars?+
It can, but pick the rate with care. Battery electric values have moved a lot as new models, incentives and charging networks change, and some have depreciated faster than equivalent petrol cars while others hold up well. Use a recent resale estimate for the specific model rather than a single blanket rate.
Is depreciation the same as the cost of finance?+
No. Depreciation is the fall in the car value whether you paid cash or borrowed. Finance interest is an extra cost on top if you borrow. A lease or PCP deal is in effect a way of paying for the depreciation over the term plus interest and fees.
How can I lose less to depreciation?+
Buy a car a year or two old so someone else takes the steepest first-year drop, choose a model with a strong resale record, keep the mileage and condition good, hold the car longer so the yearly loss shrinks, and keep the service history complete. Colour and popular options can matter at resale too.
Does mileage change the figure?+
Yes. High annual mileage lowers resale value beyond ordinary age, so a high-mileage car effectively depreciates faster. If you cover well above average miles, use a higher rate; if you barely drive, a lower one may fit.
Things to watch
- This is an estimate from a single average rate; real values move with the market, mileage and condition.
- Electric and niche models can depreciate very differently from the petrol-car averages shown here.
- The figure excludes finance interest, insurance, fuel and servicing, which are separate running costs.
Last updated: 2026
This is an estimate for general guidance, not financial, tax, legal or medical advice. Figures can change and individual circumstances vary. Always confirm with an official source before making decisions.
Built and maintained by Vikas Dulgunde. Editorial standards.