Car Depreciation & Total Cost of Ownership Calculator
Estimate what your car will be worth each year and what it really costs to own. Enter the price, the type of vehicle and how long you will keep it, add loan interest, insurance, maintenance and fuel, and see the resale value, total cost and cost per mile.
Written by Suhaib Hassan. Depreciation rates are typical estimates, not a valuation of your car. Our methodology.
Each year the car loses a percentage of its value. Loan interest, insurance, maintenance and fuel are added to find the total cost.
Depreciation is often the biggest cost of a car, yet it never shows up on a bill. This makes it visible before you buy.
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Year-by-year value and cost
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| Year | Starting value | Loss rate | Value lost | Ending value | Total value lost | Cumulative cost |
|---|
Typical five-year retention by vehicle type
What each type keeps after five years when bought new, using the typical curve above. Real results depend on the model, condition, mileage and market.
| Vehicle type | Year 1 loss | Value kept after 5 years | Loss on your price |
|---|
How the estimate is built
Value each year
value₍ₙ₎ = value₍ₙ₋₁₎ × (1 − rate₍ₙ₎)Loan interest
payment = P·r ÷ (1 − (1 + r)⁻ⁿ)
interest = payments − principal repaidTotal cost of ownership
TCO = value lost + interest + (insurance + maintenance + fuel) × yearsMarket value vs tax depreciation
This tool estimates resale value. The tax depreciation used for business vehicles follows different schedules, such as the IRS MACRS tables and vehicle limits in IRS Publication 946, and is not the same thing.
Registration, sales tax, parking and repairs beyond routine maintenance are not included.
Worked examples
Illustrative purchases, each checked by hand. The first is the default setup.
$38,500 midsize SUV, 5 years
Typical curve: 18% in year 1, 15% in year 2, then 10% a year.
Y2: × 0.85 = 26,835
Y3–5: × 0.9³ = 19,562.50
lost = 38,500 − 19,562.50 = 18,937.50 (49.2%)
Loan interest
$33,500 borrowed at 6.25% APR for 60 months.
total paid = 39,093
interest = $5,593
Buying used
Same car, two years old at $30,000.
years 3–5 at 10%: 30,000 × 0.9³ = 21,870
lost only 8,130 (27%)
How does car depreciation work?
- A new car loses value fastest in the first year or two, often 15% to 30%, then more slowly.
- Depreciation depends on the make and model, mileage, condition, and demand in the used market.
- Total cost of ownership adds loan interest, insurance, maintenance and fuel to the value you lose.
- A slightly used car often costs less to own because the first owner has already absorbed the steepest loss.
Treat every figure here as an estimate. For a car you already own, check its current value in a used-car guide or with dealer offers.
By Suhaib Hassan · Reviewed 29 September 2026 · How CalculatePilot verifies formulas →
Sources
- IRS Publication 946, How to Depreciate Property (MACRS and passenger vehicle limits).
- AAA, Your Driving Costs, annual study of vehicle ownership costs including depreciation.
- U.S. Bureau of Labor Statistics, Consumer Price Index for used cars and trucks.
Frequently asked questions
How much does a car depreciate in five years?
A common rule of thumb is around 40% to 60% for a new car, depending on the model. This calculator's typical curve loses about 50% over five years for a midsize SUV, but individual vehicles vary widely.
Which cars hold their value best?
Trucks and some popular SUVs tend to keep more value, while luxury sedans and many electric vehicles have lost more. Reliability, fuel prices, incentives and new model launches all move the market.
Is it cheaper to buy used?
Often, because the first owner pays for the steepest depreciation. Use the condition setting to see the effect, but include the cost of any extra maintenance an older car needs.
Does mileage affect depreciation?
Yes. Higher mileage lowers resale value and can accelerate wear. This tool uses your mileage to work out cost per mile; for a precise resale value, compare listings with similar mileage.
What is total cost of ownership?
It is everything that leaving the car in your driveway costs over the time you own it: the value it loses, loan interest, insurance, maintenance, fuel and other running costs, less nothing you get back except the resale value.
How much a car typically loses in year one and after: car depreciation chart guide.
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