Estimate how much your car's value will decline over the next few years using a fixed annual depreciation rate, and see the estimated resale value year by year.
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Car depreciation is the gradual loss of a vehicle's resale value over time, driven by age, accumulated mileage, wear, and newer models arriving on the market. This calculator uses a fixed annual percentage rate applied compoundingly year over year — each year's value is calculated as a percentage of the previous year's value, not of the original price, which is why later years lose fewer dollars even at the same percentage rate. Depreciation is steepest in a vehicle's first few years, commonly cited in the 15-20% range annually for typical mass-market vehicles, though the exact figure varies enormously by brand reputation, reliability record, segment (luxury vehicles and electric vehicles with fast-evolving battery technology often depreciate faster), and local resale demand. Because this tool applies one constant rate across the whole projection period, it approximates a real depreciation curve that is usually somewhat steeper in year one and gradually flattens afterward — useful for a general resale-value estimate, but not a substitute for checking actual current listings of comparable vehicles for a precise figure.
Few purchases lose value as predictably, and as steeply, as a car. Understanding roughly how much value a vehicle will shed over the years ahead matters for two very different financial decisions: how much to budget if you plan to sell or trade in later, and how a car compares to other large purchases as a store of value (spoiler: it almost never compares favorably, which is precisely why depreciation deserves attention before signing).
The math behind this calculator is compound depreciation, the mirror image of compound interest. Instead of a balance growing by a fixed percentage each year, the car's value shrinks by a fixed percentage each year — applied to the previous year's already-reduced value, not the original price. This compounding effect is why a car doesn't lose the same dollar amount every year even at a constant percentage rate: a 15% loss on a $25,000 car in year one is $3,750, but a 15% loss on the resulting $21,250 in year two is only about $3,188. The percentage stays constant; the dollar amount shrinks.
Real-world depreciation curves are not perfectly constant, though. Industry data consistently shows new cars losing value fastest in their first one to two years — sometimes 20-30% in year one alone for certain models — before the annual percentage loss gradually moderates in later years. A single constant rate applied across a five-year projection is therefore a simplification: it will tend to slightly overestimate value loss in the earliest years and slightly underestimate it in later years compared to a real depreciation curve, though the endpoint estimate after several years is usually a reasonable approximation for budgeting purposes.
Several factors push individual vehicles well above or below any general average rate. Brand and model reputation for reliability strongly influences resale demand — vehicles with a track record of low maintenance costs and long service life tend to hold value better than comparable vehicles with a history of costly repairs. Segment matters too: luxury vehicles often depreciate faster in percentage terms than economy vehicles, partly because their high sticker price includes brand and feature premiums that buyers of used vehicles are less willing to pay for. Electric vehicles have shown particularly variable depreciation as battery technology, government incentive changes, and charging infrastructure improvements have all affected used-EV demand differently across model years.
Mileage and condition also matter enormously and are not captured by a simple annual percentage at all — two identical model-year cars can have meaningfully different resale values purely based on accumulated mileage, accident history, and maintenance records. For the most accurate real-world estimate of what a specific car will be worth, use this calculator's year-by-year projection as a general planning baseline, then check actual current listing prices for comparable used examples of your specific make, model, year, and mileage closer to when you actually plan to sell.
15-20% per year is a commonly cited average for typical vehicles in their first several years, but check current resale listings for your specific make and model for a more accurate figure, since rates vary significantly by brand, segment, and reliability reputation.
Because the percentage is applied to the previous year's already-reduced value rather than the original price, so the same percentage produces a progressively smaller dollar amount as the base value shrinks — this is the same compounding logic as compound interest, just working in reverse.
Real depreciation is typically steepest in the first one to two years and gradually moderates afterward, so a constant-rate projection is a simplification; it's most accurate as a rough multi-year estimate rather than a precise prediction for any single year.
It varies significantly by model and has changed over time as battery technology and incentives evolve, so there's no single universal answer — check current resale data for your specific EV model rather than assuming it follows the same rate as a comparable gas vehicle.