How a car loses value
New cars depreciate fastest in their early years — often the steepest drop is the moment you drive off the lot. A common model is declining-balance: the car loses a percentage of its current value each year, so the losses are large at first and smaller later. This tool applies that model and charts the curve.
Why the rate matters
A 15% annual rate roughly halves a car's value in about four to five years; a higher rate hits harder. Depreciation is usually the single biggest cost of owning a car, bigger than fuel or maintenance, even though it's invisible until you sell.
Buying to limit the hit
Because the first years are steepest, a lightly-used car a few years old avoids the worst of the drop. Brands and models also depreciate at very different rates, which is worth checking before buying.
Frequently asked questions
What depreciation rate is typical?
Many cars lose around 15–20% a year, with the first year often worse. Enter a rate that matches your car and market for a closer estimate.
Is depreciation linear?
No. This uses declining-balance, so the car loses more value early and less later — closer to how real cars behave than a straight line.
How much does a car depreciate?
A new car loses about 20% of its value in the first year and around 15% each year after, so it is worth roughly half after five years.
How is depreciation calculated?
A yearly percentage is applied to the remaining value (declining balance). The tool projects the value year by year from the starting price.
Which cars depreciate least?
Reliable brands in high used-car demand hold value best; low mileage and good condition help too.