Introduction
Cars lose value over time. This is called depreciation, and it starts the moment you drive off the lot. Our Car Depreciation Calculator estimates how much value your car will lose over the years you own it, from the price you paid, the car's age, its fuel type, whether it is a car or a light truck, whether the brand is mass-market or luxury, and how far you drive. Knowing your car's depreciation is important whether you plan to sell, trade in, or simply want to understand the true cost of owning your vehicle.
How to Use Our Car Depreciation Calculator
Fuel Type, Body and Brand: Choose gas, hybrid, plug-in hybrid or electric; car or light truck (SUVs, minivans and pickups are light trucks); and a mass-market or luxury brand. Each combination loses value at its own yearly rate.
Vehicle Status: Choose New or Used. A new car takes an extra drop in value when it is first sold.
Vehicle Age When Bought: For a used car, choose how old it was when you bought it.
Purchase Price: Type in the total price you paid for your car. For a plug-in hybrid or electric car bought new, take off any federal tax credit.
Ownership Duration and Annual Mileage: Choose how many years into the future you want to see and how many miles you drive each year.
What Is Car Depreciation?
Car depreciation is the drop in your vehicle's value over time. The moment you drive a new car off the lot, it starts losing money. This loss in value is the single largest cost of owning a new car: AAA puts it at $4,422 a year on average.1
How Does Car Depreciation Work?
Argonne National Laboratory measured how the private-party values of vehicles in clean condition fall with age, separately for each fuel type and for mass-market and luxury brands.2 A vehicle loses part of its value when it is first sold, and then a steady share of its remaining value each year. For mass-market brands the yearly rate is 11.3% for gas vehicles, 12.1% for hybrids, 16.6% for plug-in hybrids and 19.2% for electric vehicles, and for luxury brands it is 14.5%, 12.0%, 14.3% and 17.4%.2 Light trucks hold their value better than cars, by 3.2% for gas vehicles and 22.6% for hybrids.2 Because each year's loss is a share of what is left, the dollar amount lost gets smaller as the car ages.
Mileage changes the picture. In a study of millions of U.S. used-car listings, each extra 10,000 miles lowered a conventional car's retention rate by 4.64%, a hybrid's by 4.67%, a plug-in hybrid's by 4.49% and a non-Tesla electric car's by 5.07%, at the same age.3 The calculator compares your annual mileage with 12,000 miles a year and applies those rates.
Why Depreciation Matters
Understanding depreciation helps you make smarter buying and selling decisions. If you plan to sell or trade in your car after a few years, knowing how much value it will lose tells you the true cost of ownership. For example, a car that costs $35,000 and is worth $18,000 after five years has cost you $17,000 in depreciation, or $3,400 per year just in lost value.
This is also why buying a car that is one to three years old is a popular strategy. You let the first owner absorb the biggest depreciation hit, and you get a nearly new vehicle for thousands less. If you're deciding between buying and leasing, our Car Lease Calculator can help you compare those two options side by side.
Tips to Minimize Depreciation
- Keep your mileage reasonable. Driving fewer miles than average helps the car keep its value.
- Maintain your car well. Regular oil changes, tire rotations, and keeping service records make a big difference at resale time.
- Avoid heavy modifications. Aftermarket changes can hurt resale value for most mainstream vehicles.
- Consider buying used. A gently used car gives you more value for your money because the drop at first sale has already happened.
- Make sure your tires match. Properly sized tires affect both safety and perceived condition, and our Tire Size Calculator can help you find the right fit.
How States Value a Car for Tax
Some states value a car for tax with a schedule written into law. Washington values a vehicle at 85 percent of the manufacturer's base suggested retail price times a percentage for its year of service, from 100 in the first year to 10 for a vehicle 16 or older.4 California's vehicle license fee starts from the cost price, placed in a $200 class, and takes 100 percent of it in the first year, 90 percent in the second year and 15 percent from the 11th year on.5 California's count starts again when the car is sold. These schedules are set by law and are not market values; the calculator shows both for the years you own the car.
How This Calculator Works
The calculator starts from your purchase price, applies the yearly rate for your fuel type, body and brand type, adds the drop at first sale for a new car, and adjusts for your mileage. It assumes used-car and new-car prices move together from here. The results include total depreciation in dollars, the percentage of value lost, the average yearly cost, the cost per mile driven and a year-by-year schedule, with a comparison of the eight fuel-type and brand curves. A particular model often keeps 10% to 25% more or less than these averages.