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Car Depreciation Calculator
Estimate your car's current value based on its purchase price, age, and depreciation rate. Use this tool to plan resale, insurance, or accounting purposes with confidence.
Depreciation Estimator
Enter car details to estimate current value, depreciation over time, and resale prediction.
How to Use This Car Depreciation Calculator
- Enter your Original Price ($) — This value represents your original price
- Enter your Year of Purchase — This value represents your year of purchase
- Enter your Annual Depreciation Rate (%) — This value represents your annual depreciation rate
- Enter your Current Year — This value represents your current year
- Click Calculate — Review your results in the output section below the form. The calculator instantly computes all values based on your inputs.
- Adjust and Compare — Modify any input to see how changes affect the result. Try different scenarios to find the optimal approach for your situation.
All calculations are performed instantly in your browser. Your data is never sent to any server or stored anywhere — your financial information remains completely private.
Formula and Methodology: Vehicle Depreciation Formula (Declining Balance Method)
Value After n Years = Purchase Price × (1 - Depreciation Rate)^n
Where:
- Purchase Price — The original MSRP or purchase price of the vehicle
- Depreciation Rate — Annual percentage of value lost (typically 15-25% in year 1, 10-15% in subsequent years)
- n — Number of years of ownership
Worked Example
A $35,000 car with 20% first-year depreciation and 15% subsequent years: Year 1: $35,000 × 0.80 = $28,000. Year 2: $28,000 × 0.85 = $23,800. Year 5: $35,000 × 0.80 × 0.85^4 = $14,600.
Limitations and Assumptions
Depreciation varies significantly by make, model, and market conditions. Trucks and SUVs often depreciate slower than sedans. Luxury vehicles depreciate faster in absolute dollars. Electric vehicles have historically depreciated faster due to rapid technology improvements, though this trend is changing as the market matures.
Key Concepts and Definitions
Understanding the following key concepts will help you interpret your results and make better financial decisions:
- Principal — The initial amount of money involved in the calculation, whether it is a starting balance, loan amount, or investment.
- Interest Rate — The percentage charged or earned on the principal amount, typically expressed as an annual rate (APR). This rate determines how quickly your money grows or how much borrowing costs.
- Compounding — The process of earning interest on previously earned interest. More frequent compounding (daily vs. monthly vs. annually) results in higher effective returns or costs.
- Time Horizon — The length of time over which the calculation applies. Longer time horizons amplify the effects of compounding and small differences in rates.
- Present Value vs. Future Value — Present value is what money is worth today; future value is what it will be worth at a specific point in the future, accounting for growth or inflation.
These concepts form the foundation of virtually all financial calculations. Understanding how they interact helps you evaluate any financial product or decision with confidence.
Real-World Example: Putting the Car Depreciation to Work
Let's compare vehicle ownership costs for a typical scenario.
Scenario: David is deciding between buying a new car and a certified pre-owned (CPO) vehicle:
New 2024 Honda Accord: $30,000 purchase price, financed at 5.9% for 60 months. Monthly payment: $579. After 5 years, estimated value: $13,500 (55% depreciation). Total cost of ownership including fuel, insurance, and maintenance: approximately $48,000.
CPO 2021 Honda Accord: $22,000 purchase price, financed at 6.5% for 48 months. Monthly payment: $522. After 4 years (at 7 years old), estimated value: $8,800 (60% of purchase). Total cost of ownership: approximately $36,500.
The CPO option saves David approximately $11,500 over the ownership period while providing essentially the same transportation utility. The new car offers the latest features and a longer warranty period, but the CPO vehicle — already past its steepest depreciation years — provides better overall value. This calculator helps quantify these trade-offs with your specific numbers.
Scenario Comparison: Average Vehicle Depreciation by Year of Ownership
How a $35,000 vehicle typically depreciates over time.
| Year | Value | Year Loss | Cumulative Loss | % of Original |
|---|---|---|---|---|
| New (off lot) | $31,500 | $3,500 | $3,500 | 90% |
| Year 1 | $28,000 | $3,500 | $7,000 | 80% |
| Year 3 | $21,000 | ~$3,500/yr | $14,000 | 60% |
| Year 5 | $15,750 | ~$2,625/yr | $19,250 | 45% |
| Year 10 | $8,750 | ~$1,400/yr | $26,250 | 25% |
