Car Depreciation Calculator
See how much a car loses in value and how quickly — value after your chosen period, total lost and the average yearly drop, with a value-curve chart.
Protect against value loss
GAP insurance covers the value gap after a write-off or theft.
The model assumes a constant annual loss rate (value × (1 − rate)^years). In reality the biggest drop is in year one — treat the result as an average.
How we calculate depreciation
The calculator uses exponential depreciation: each year the car loses the same percentage of its current value. Value after the period = price × (1 − annual loss)^years. The loss is the difference between the purchase price and the final value.
The chart shows the value curve year by year (blue) and the lost portion (grey). A typical car loses 15–20% a year, often most in the first year — a new car 'loses value as it leaves the forecourt'.
Formula
- Value after period = price × (1 − loss)^years
- Value lost = price − value after period
- Value remaining % = value after period ÷ price
- Average / year = loss ÷ number of years
Frequently asked questions
How much does a new car lose per year?
Usually 15–20% a year, with the first year the steepest (20–30%). After 3 years a new car is typically worth 50–60% of its price.
Which cars lose the least?
Popular models with strong second-hand demand, low running costs and a good reliability reputation. Niche, expensive-to-run and heavily-optioned cars depreciate faster.
Does leasing protect against depreciation?
No — depreciation happens regardless of how you finance. GAP insurance protects you: it covers the gap between market value and the amount your policy pays after a loss.
Is my data sent anywhere?
No — everything is calculated locally in your browser.
Depreciation: the biggest car cost nobody budgets for
Your car’s largest running cost never appears on a receipt. Depreciation — the gap between what you paid and what the car is worth — dwarfs fuel and insurance for most cars under ten years old. It compounds downwards: the calculator above applies your chosen annual percentage loss to a falling balance, value = price × (1 − d)years, which matches how real used-car values behave far better than straight-line guesses.
Typical annual loss rates: 15–25% in year one (sometimes more the moment a new car is registered), settling to 10–15% a year in mid-life and slowing further once a car is past eight or ten years old. Brand, fuel type, mileage and fashion all move the rate — which is why the calculator lets you set it rather than pretending one number fits all cars.
Worked example
A £30,000 car losing 15% a year is worth about £13,311 after five years — £16,689 gone, or roughly £278 a month, silently. Compare that with the same money’s fuel bill and it is usually no contest. Meanwhile a £15,000 three-year-old car losing 10% a year costs about £4,065 over three years — the earlier owner already paid the steep part of the curve.
How to lose less money
- Buy at 2–4 years old. Someone else absorbs the cliff; you get most of the car’s life at a fraction of the loss.
- Keep cars longer. Depreciation per year falls with age — swapping every three years locks you permanently into the steep segment.
- Choose slow depreciators. Reliability reputation, sensible spec and popular colours preserve value; niche trims and lurid paint do not.
- Mileage bands matter. Values step down at round numbers (60k, 100k); a car just below a band is worth real money more than one just above.
- Condition and history are leverage. Full service history, tidy bodywork and two keys cost little to maintain and return their value at sale time.
Additional questions
Why does the calculator use a percentage rather than fixed £ per year?
Because markets price cars proportionally: a £40,000 car and a £10,000 car do not lose the same £2,000 a year. Percentage-of-remaining-value tracks real depreciation curves — steep at first, flattening with age — far more faithfully.
Do electric cars depreciate faster?
Recent years saw sharp used-EV price falls as new-car price cuts and improved models arrived, so early adopters lost heavily. That same volatility makes used EVs cheap to buy now; long-run rates are settling as the market matures. Check model-specific data before assuming either extreme.
Is depreciation a real cost if I never sell?
Yes — it is deferred, not avoided. You realise it at trade-in, at scrappage, or as the shrinking value your insurance would pay out. Running a car “into the ground” is often rational precisely because it stretches the same total depreciation over the most years.
Written & fact-checked by Łukasz Wójcik — independent developer, not a licensed financial adviser. Last reviewed: 2026-08-17.
Methodology & assumptions
This estimate is based on the figures and assumptions you enter (purchase price, running costs, mileage, depreciation rate) — actual costs vary by specific vehicle, condition, location and market, and this is not a valuation of any individual vehicle.
Scope & limitations
This calculator is a free, general-purpose estimation tool. It uses simplified assumptions, does not know your full personal or financial circumstances, and is not a substitute for professional financial, tax or legal advice. Figures can change after publication — always check the current rate or threshold at the source below before relying on a result.
Where to check this yourself
Every rate, threshold and rule used above comes from the bodies below. They are the authority; this page is not. Where a figure here disagrees with a source, the source is right — and we would be grateful if you told us. Links go to official government bodies and to registered charities that give free, impartial guidance; none of them pays us and we take no commission.