Monthly Car Depreciation Calculator
Calculate monthly and annual car depreciation from purchase price, vehicle age, and mileage.
See the true ownership cost beyond your monthly loan payment.
Depreciation is the single largest cost of car ownership — yet it is rarely listed on a car dealer’s sticker. Unlike fuel, insurance, or maintenance costs, depreciation is invisible day-to-day, which makes it easy to underestimate. Understanding depreciation is essential for making smart vehicle purchase decisions.
What is Depreciation?
Depreciation is the loss in value a vehicle experiences over time. The moment you drive a new car off the lot, it loses 9–11% of its value. By the end of year one, most new cars have lost 15–25% of their purchase price. After 5 years, the average vehicle retains only 37–45% of its original value.
Depreciation Rates by Year (Typical New Vehicle)
| Year | Depreciation | Cumulative Loss |
|---|---|---|
| Year 1 | 15–25% | 15–25% |
| Year 2 | 10–15% | 28–38% |
| Year 3 | 8–12% | 37–48% |
| Year 4 | 7–10% | 43–55% |
| Year 5 | 6–8% | 50–60% |
The Double-Declining Balance Method
One common way to model depreciation is the double-declining balance method, which applies a fixed percentage to the current (not original) value each year. This produces the characteristic steep early depreciation curve seen in most vehicles.
Factors Affecting Depreciation Rate
- Brand and model: Luxury brands (Mercedes, BMW) depreciate faster than reliable mass-market brands (Toyota, Honda). Toyota Tacoma trucks are famous for exceptional value retention.
- Mileage: Higher-than-average mileage (more than 15,000 km / 10,000 miles per year in most markets) accelerates depreciation.
- Fuel type: Petrol/gasoline vehicles currently depreciate faster in some markets due to EV transition pressure.
- Condition and colour: Popular neutral colours (white, silver, black) depreciate less than unusual colours.
True Monthly Cost
Monthly depreciation is often $200–$700+ for new cars, making it larger than most loan payments once you account for the equity component.
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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