Car Depreciation Calculator
Fuel gets the headlines but depreciation eats the budget: for most owners, the value a car silently loses each year is the single biggest cost of driving - often larger than fuel and insurance combined. This calculator runs the compounding curve from purchase price, years owned and an annual rate, and reports the three numbers that matter: current value, total value lost, and the honest cost per year of ownership.
The default 15% annual rate encodes the industry's uncomfortable shape: cars lose 40-50% of their value in the first three years, then the curve flattens dramatically - which is why the 3-year-old used car is the classic rational purchase (someone else paid the steep part), and why a two-year lease on a new luxury badge is the most expensive way to own anything with wheels.
How to use
- Enter the purchase price and years owned.
- Set the annual depreciation rate (15-18% is typical; luxury cars run higher).
- Read current value, total loss and per-year cost - then try 3 years versus 8.
Frequently asked questions
How fast do cars lose value?
New cars typically drop 15-20% the moment they're driven off the forecourt and reach 40-50% cumulative loss by year three, after which depreciation settles to single digits a year. Compounding the classic 15% rate matches real market data for average sedans; luxury marques and heavy EVs have run steeper, while models with cult demand run flatter.
Why is depreciation the biggest cost of owning a car?
Because it's invisible: fuel, insurance and maintenance announce themselves in bills, while depreciation happens silently in the resale price. A $30,000 car that's worth $18,000 after three years cost you $4,000 a year - likely more than the fuel to drive it. Any honest car budget starts with this line, not the pump.
What's the cheapest age to buy a used car?
Around 3 years old: the steepest depreciation is done, the car is modern enough for safety tech and reliability, and the remaining curve is gentle. By year 8-10 maintenance costs start climbing to meet the flattened depreciation, which is the other edge of the curve - the sweet spot is between them.
Do electric cars depreciate differently?
Recently, faster - rapid battery-tech improvements and aggressive new-price cuts on EVs dragged 3-year residuals below comparable petrol cars in many markets, though the gap is narrowing as batteries prove durable. If you're shopping EVs, run this calculator with a steeper early rate (20-25%) and let the used market's shape inform the risk.