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: A mid-size SUV with an MSRP (Manufacturer’s Suggested Retail Price) of $38,000, now 5 years old, with 60,000 miles on it (12,000 a year, which is average) and in good condition.

The calculator works in three multiplied steps rather than a single compound rate:

• Age factor at 5 years: 0.40
• Mileage factor at 12,000 miles a year, which is normal use: 1.00
• Condition factor for good: 1.00
• Estimated retail value: $38,000 × 0.40 × 1.00 × 1.00 = $15,200
• Trade-in (about 85% of retail): $12,920
• Private sale (about 105%): $15,960

The age factor drops in steps rather than smoothly, because that is closer to how the used market actually behaves: values fall off a cliff at the 3-year mark when lease returns flood the market, then again around 8 to 10 years. Push the same vehicle to 100,000 miles and the mileage factor falls to 0.85, taking the estimate down to about $12,900.

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