Car Depreciation Calculator
Depreciation is the largest single cost of owning a newer car, and the only one that never appears on a bill. Set the price and how long you plan to keep it to see what you are actually spending.
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How car depreciation works
Depreciation is not a straight line. A new car takes its heaviest hit immediately — part of it in the first minutes, as it stops being new — and typically loses on the order of a fifth of its value across the first year. After that the losses are calculated against the remaining value, so each year removes a smaller absolute amount than the one before.
That curve is why the arithmetic of buying used is so favourable. The first owner absorbs the steepest section. A three-year-old car has already given up something like half its original value, and the buyer gets the flatter part of the curve for the remainder.
What makes one car hold value better than another
Brand reputation for reliability is the strongest single factor, followed by how well the specific model sells used in your market. Beyond that: unusual colours and options narrow the buyer pool, high mileage compounds against you, a full service history protects value, and heavily discounted new cars start their depreciation from the discounted price rather than the list price.
Supply matters too. Any period when new cars are scarce props up used values across the board, and the reverse is also true. Depreciation estimates made in one market condition can be badly wrong in another.
Using the numbers
The per-month figure is the one worth internalising. If a car is losing 380 a month in value, that sits alongside the loan payment, the insurance and the fuel as part of what it costs you to have it — and it is often the largest of the four.
Depreciation stops being the dominant cost somewhere around the seven to ten year mark, at which point repairs take over. That crossover is roughly where the cheapest possible motoring lives, if you are willing to accept the reliability trade-off.
Frequently asked questions
How much does a new car depreciate in the first year?
Commonly around 20 percent, though the range across models is wide. Cars sold with heavy incentives depreciate more, because part of the drop happened before you drove away. Models with strong reputations and constrained supply can lose far less.
Which cars hold their value best?
Historically, models with strong reliability reputations and steady used demand - certain trucks, some Japanese brands, and models where supply is limited. Sales figures for the used market in your own country are a better guide than global reputation.
Does mileage or age matter more?
Both, and they interact. Age drives the underlying curve, but mileage well above average for the age accelerates it sharply, and very low mileage can add a premium. Roughly 12,000 to 15,000 miles a year is treated as normal in most markets.
Do electric cars depreciate faster?
They have historically depreciated differently from combustion equivalents, and the pattern has moved a lot as battery technology, range expectations and purchase incentives have changed. Because incentives reduce what the first owner effectively paid but not what the used buyer compares against, they can widen the apparent drop. Check recent used prices for the specific model rather than relying on a general rule.