Financial Calculators

Car Depreciation Calculator

This calculator calculates the cost of depreciation for your car. Estimate the car's value once it has been used.

Car depreciation calculator

Car value after...

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Table of contents

What is depreciation and how does it work? The depreciation definition
What Causes a Car To Depreciate
How quickly does the value of cars drop?
What Cars Are Most Depreciating (and Which Types Less)?
How to lower your car's depreciation rate
Car Insurance: Don't Forget It

What is depreciation and how does it work? The depreciation definition

Depreciation simply means a decrease. Imagine that you bought your car for $20,000. You might imagine that the car is no longer the same as it was when you purchased it. You will likely agree that it would be unfair to sell it for $20,000 more - you have a feeling that it is less valuable now.
Economists believe that your car has lost value over the years. They would add that the reduction of vehicle value over time is the basis of depreciation. The formal definition of depreciation is that it is the method used to calculate the cost of an asset over its life.

What Causes a Car To Depreciate

Your car's market value can be affected by many things. Some factors are easy to control, others are more difficult. Here are the main factors that contribute to car depreciation.
  • Mileage: Your car's value will drop the more you drive it. If you can reduce your car's mileage, your car will retain its value.
  • Fuel economy: How many Hummers have you seen on the roads lately. Because car buyers want cars that get more mileage per gallon.
  • Shifting consumer preferences Some years, people prefer sedans. In other years, people prefer SUVs. It won't be as noticeable that more popular cars depreciate faster than others.
  • Condition: You can damage the car both from the outside and inside, which will impact its worth when you sell it.
  • Reputation: Cars that are built to last more than models that have a reputation for breaking down, or are constantly being recalled for their reliability.
  • These are just a couple of things to keep in mind when you're evaluating your wheels.

    How quickly does the value of cars drop?

    There are many factors that affect how and why cars lose value. However, there is one constant: new cars tend to depreciate more quickly than used cars. How much faster? We will just say that we wish you had your seat belts on.
  • AFTER ONE MUTE: A brand-new vehicle loses 9-11% of its value as soon as it leaves the lot. A $30,000 brand-new vehicle is equivalent to $3,000 in the bank as you drive it home.
  • AFTER 1 YEAR: A study shows that cars with new engines experience the biggest decline in value within the first 12 months of ownership. A car that has been owned for less than one year is likely to be worth 20% less than its original price.
  • AFTER FIVE YEARS: This new car will lose between 15 and 25% every year after the steep first-year dip. It will then depreciate another 15% to 25% each year until it reaches the five years mark. After five years, the value of that new car is likely to drop by 60%.
  • Initial Car Value: $30,000
    Timespan| New car value
    1 minute| $27,000
    1 year| $24,000
    2 years| $20,400
    3 years| $17,340
    4 years| $14,740
    5 years| $12,530

    What Cars Are Most Depreciating (and Which Types Less)?

    Although all new cars are losing value at an alarming rate; some models retain their value better than others.
    Research shows that pickup trucks are less likely to depreciate in the first five years, while electric and luxury cars lose the greatest value. Toyota and Honda have strong reputations for reliability and durability. This makes them very reliable in holding onto their value.
    Here's the list of the vehicles with depreciation at the highest and lowest levels in 2019:

    Top 5 Vehicles with the lowest depreciation

    Rank| Model| Average 5-Year Depreciation
    1| Jeep Wrangler/Wrangler Unlimited| 27.3%
    2| Toyota Tacoma| 29.5%
    3| Toyota Tundra| 37.1%
    4| Nissan Frontier| 37.8%
    5| Toyota 4Runner| 38.1%

    Top 5 Vehicles with the highest depreciation

    Rank| Model| Average 5-Year Depreciation
    1| Nissan Leaf| 71.7%
    2| Chevrolet Volt| 71.2%
    3| BMW 7 Series| 71.1%
    4| Mercedes-Benz S-Class| 69.9%
    5| Ford Fusion Energi| 69.4%
    There are pros or cons to buying a car in either the high-depreciation or low-depreciation ranges. While cars that are held at their best will be easier for people to resell, they can also be more costly to buy. While you might be able to get a great deal on an older BMW five-year-old, it is not easy to repair.

    How to lower your car's depreciation rate

    Unfortunately, car decline is inevitable. However, there are steps that can be taken to slow down the process.

    1. Reduce your car's miles.

    According to the United States Department of Transportation Federal Highway Administration that Americans drive about 13,500 miles per annum,6 that's more than 1,000 miles per month.
    While we don’t expect everyone to ride to work every single day, think about all the calories you’ll burn. There are ways to reduce your driving distance. Reduce the number of trips you make each week by completing all your errands together. If you often take long, cross-country road trips, renting a vehicle is a better option. All those miles can add up!

    2. Follow your car's maintenance program.

    When it comes to car maintenance, it is the little things that really matter. Cars that are maintained well will retain their value. Regular maintenance can not only improve safety and performance but can also save you thousands of dollars on future repairs.
    Check your car's owner's manual to see a detailed servicing schedule. This will allow you to know when to bring your car to the mechanic for regular maintenance.
    Here are some additional maintenance tips. Our free Ramsey Car Guide has a whole chapter devoted to car maintenance.

    3. Purchase reliable, gently-used cars

    As we have mentioned, new automobiles lose their value much faster than older automobiles. Saving up is the best way to buy your car.
    is a millionaire who drives a 4-year-old car with 41,000mi. When they buy used cars, they are letting someone else take the brunt of the car's rapid loss of value in its first year. The result is a reliable car that can be maintained properly for many years. Smart!

    Car Insurance: Don't Forget It

    New cars are more expensive to cover, and they also depreciate faster. It's possible to save as much as 12 percent on car insurance by buying a 5-year-old model instead of a brand-new one.
    This is why we recommend that you work with one of our insurance Endorsed Local Producers (ELPs). You can rely on them to help you find the best insurance at the lowest price, regardless of whether you are in the market for a vehicle or plan to drive Old Faithful for many more years.
    Parmis Kazemi
    Article author
    Parmis Kazemi
    Parmis is a content creator who has a passion for writing and creating new things. She is also highly interested in tech and enjoys learning new things.
    Car Depreciation Calculator English
    Published: Mon Apr 11 2022
    In category Financial calculators
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