How much does a car depreciate per year?

It varies a lot by model and age. AAA's 2025 study estimates average new-car depreciation at about $4,334 a year over the first five years. Older cars lose less in dollar terms each year.

How do I calculate car depreciation?

Multiply the price by (1 minus the annual rate) for each year you keep it. The difference between the price and the final value is the total depreciation.

When does a car depreciate the most?

Usually in the first few years after purchase, which is why lightly used cars can be good value.

Does mileage affect depreciation?

Yes. Higher mileage usually lowers value, as does a missing service history or accident record.

Is this a valuation of my car?

No. It's a planning estimate based on the rate you enter. For a market value, check a valuation guide or comparable listings.

Car Depreciation Calculator (2026) / CarO

Written by Muneeb Rana · Last updated 21 October 2026

Quick answer: A car depreciation calculator estimates future value with a declining-balance formula: value = price × (1 − annual rate)^years. At an assumed 15% a year, a $35,000 car would be worth about $15,500 after five years. AAA's 2025 study puts average new-car depreciation at $4,334 a year, its largest single ownership cost.

TL;DR

Enter price, age and an annual depreciation rate.
Depreciation is usually steepest in the first years.
Good records and low mileage help resale value.

This car depreciation calculator estimates how much value a car loses each year and what it might be worth when you sell. Depreciation is the biggest single cost of owning most new cars, according to AAA's annual driving-costs study, yet it's the one people forget because they never write a cheque for it.

How to use the car depreciation calculator

Enter the purchase price and the car's current age.
Choose an annual depreciation rate (the default 15% is an editable assumption, not a market figure).
Choose how many years you plan to keep the car.
Read the year-by-year table and total value lost.
For a market valuation, compare with a valuation guide or real listings.

How the car depreciation calculator works

value_year_n = price * (1 - rate)^n
loss_year_n  = value_year_(n-1) - value_year_n
total_loss   = price - value_year_N

The default rate is a simple planning assumption. Real depreciation varies by brand, model, mileage, condition, fuel type and market conditions, so treat the output as an estimate.

Worked example

A $35,000 car at 15% a year: year 1 = $29,750, year 2 = $25,288, year 3 = $21,494, year 4 = $18,270, year 5 = $15,529. Total depreciation over five years ≈ $19,470, or about $3,894 a year.

What affects depreciation

Mileage, condition, service history, accident history, colour and options, brand reputation and demand all matter. A complete, dated service record is one of the few factors you control: buyers pay more for a car with proof of maintenance. See car service history.

Depreciation in total cost of ownership

AAA's 2025 Your Driving Costs puts the average total cost of a new car at $11,577 a year at 15,000 miles, with depreciation the largest part. Add fuel, insurance and maintenance with the cost of car ownership calculator, and weigh financing with lease vs buy and the car loan calculator.

Protect resale value

Keep every receipt, service on schedule with the maintenance schedule tool, and log it in CarO's expense tracker so you can hand the next owner a clean history.

Download CarO free on the App Store or Google Play. Free with ads; optional in-app purchases.

Sources

AAA: Your Driving Costs 2025 fact sheet: newsroom.aaa.com (accessed 21 October 2026)
AAA: Estimate Vehicle Ownership Costs: www.aaa.com (accessed 21 October 2026)
CFPB: Auto loans: www.consumerfinance.gov (accessed 21 October 2026)

Disclaimer: CarO and this website give general car-care information, not professional advice. Maintenance intervals and specifications vary by vehicle, so always follow your owner's manual and a qualified mechanic. Mileage and cost figures are estimates; check local tax rules before using any log for deductions.

Car Depreciation Calculator