Monthly Car Depreciation Calculator

Depreciation is the single largest cost of car ownership, and it is the one thing that never appears on a dealer’s sticker.
Unlike fuel, insurance or maintenance it costs you nothing on any given day, which is exactly why it gets underestimated.

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)

These are the figures this calculator uses for an average car, and they match the ones on the car depreciation calculator: a 20% drop in year one, then 15% of the remaining value every year after. Cumulative loss is compounded, not added.

Compounding is the part people get wrong. Losing 15% five years running is not a 75% loss, it is 56%, because each 15% comes off a smaller number than the one before. That is also why the cumulative column above is not the sum of the column beside it.

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.