Car Value Estimator

Used car depreciation describes how a vehicle loses value over time. Cars are typically the fastest-depreciating major purchase most people make — understanding the math helps buyers and sellers set realistic expectations.

Straight-line depreciation (simplified): Annual Depreciation = (Purchase Price − Salvage Value) ÷ Useful Life (years)

Percentage depreciation model (more realistic): Value After N Years = Purchase Price × (1 − Annual Depreciation Rate)^N

Industry-average depreciation rates:

• Year 1: 15–25% of original MSRP (new car smell premium vanishes instantly)
• Year 2: additional 15–18%
• Year 3: additional 13–15%
• Year 4–5: additional 10–12% per year
• Years 6–10: 6–10% per year
• After 10 years: most vehicles stabilize at 5–20% of original MSRP (scrap/collector value)

5-year rule of thumb: A new car retains approximately 37–45% of its MSRP after 5 years (average depreciation ~10–12% annually after year 1).

Mileage adjustment: Standard assumed mileage: 12,000–15,000 miles/year. For each 1,000 miles above average, deduct approximately $0.05–$0.15 per excess mile depending on vehicle type and age.

Condition multipliers (KBB-style):

• Excellent (like new): 1.05–1.10× base value
• Good (minor wear): 1.0× base value
• Fair (visible wear, minor issues): 0.85–0.95×
• Poor (significant issues): 0.60–0.80×

Reference sources for actual market value:

• Kelley Blue Book (KBB): kbb.com
• Edmunds True Market Value: edmunds.com
• NADA Guides: nadaguides.com
• Auction data: Manheim, ADESA

Worked example: New vehicle: 2020 mid-size SUV, MSRP $38,000. Now 2025 (5 years old), 67,000 miles (average: 60,000 miles at 12K/yr).

• Base depreciation (5-year average 12% compound): $38,000 × (0.88)^5 = $38,000 × 0.528 = $20,064
• Mileage penalty: 7,000 excess miles × $0.08 = −$560
• Condition (good): ×1.0
• Estimated market value: ~$19,500

Cross-reference with KBB for your specific zip code — regional demand can add or subtract $1,000–$3,000.