This calculator projects how a car’s value falls over time so you can estimate its future resale value, plan a trade-in, or compare the running cost of different vehicles. Enter the purchase price, an annual depreciation rate and the number of years, and it returns the projected value, the total amount lost, the percentage of value remaining, and a year-by-year breakdown.
How it works
It uses the declining-balance (reducing-balance) method, which mirrors how cars actually lose value — fastest early, then more slowly. Each year the value is multiplied by (1 − rate), so the loss is a fixed percentage of the previous year’s value rather than a flat amount:
value after n years = price × (1 − rate)ⁿ
The dollar loss therefore shrinks each year even though the percentage stays constant. Most cars depreciate at roughly 15–20% per year; adjust the rate to match the make, model and mileage.
Example
A $30,000 car at 15% per year over 5 years:
| Year | Start value | Lost | End value |
|---|---|---|---|
| 1 | $30,000 | $4,500 | $25,500 |
| 2 | $25,500 | $3,825 | $21,675 |
| 3 | $21,675 | $3,251 | $18,424 |
| 4 | $18,424 | $2,764 | $15,660 |
| 5 | $15,660 | $2,349 | $13,311 |
After five years the car is worth about $13,311 — roughly 44% of its original price, with $16,689 lost.
Choosing the right depreciation rate
The rate you enter is the most important variable. Common ranges by vehicle type:
| Vehicle type | Typical annual rate | Notes |
|---|---|---|
| New mainstream car | 20–25% (year 1), 15–20% (subsequent) | First year is steepest |
| New luxury car | 20–30% (year 1) | High MSRP amplifies the first-year drop |
| New electric vehicle | 15–25% | Varies widely by make and range |
| 2–3 year old used car | 10–18% | Steepest first-year loss already absorbed |
| Classic / appreciating | Negative (not modelled here) | Some models hold or gain value |
| High-mileage / older vehicle | 8–15% | Floor effect — very old cars depreciate more slowly |
A new car often loses 15–25% the moment it is driven off the lot, reflecting the immediate transition from “new” to “used.” For a brand-new purchase, consider entering a higher first-year rate and a lower rate for subsequent years — or run the calculator twice and compare.
Practical uses for this projection
Trade-in planning: If you plan to trade in after three years, the Year 3 end value gives a rough resale estimate. Add roughly 20% to the dealer trade-in to approximate the private-sale price, as dealers discount significantly.
Total cost of ownership: Depreciation is usually the largest single cost of owning a car, often dwarfing fuel and maintenance. Comparing two vehicles over five years with different depreciation rates can reveal thousands in difference even before financing costs.
Lease vs buy: Leasing transfers the depreciation risk to the lessor and structures payments around the projected residual value. The Year 3 or Year 4 end value from this calculator is approximately what a lender calculates as the residual for a standard lease term.
Insurance: Actual cash value (ACV) insurance pays the market value at the time of a total loss, not the purchase price. Running the projection to the current age of your vehicle gives you a realistic sense of what ACV cover would pay out.