The curve, and why it is front-loaded
Depreciation is not a straight line. The steepest part is the first year, and a meaningful slice of that happens the moment a new vehicle becomes a used one, before any mileage accumulates. After that the loss is applied to a smaller and smaller remaining value each year, so the dollar amount shrinks even when the percentage stays the same. A car losing 22 percent in year one and 12 percent a year afterwards is down roughly 40 percent by year three and roughly half by year five.
Read the table above as a shape rather than a forecast. The shape is reliable: heavy early loss, a long flattening tail, and a floor in later years where a running vehicle is worth what a running vehicle is worth regardless of what it cost new. The specific numbers are the assumptions in the two rate fields, and you should change them when you have better information.
Where the assumptions come from, and what they are worth
They are round figures chosen to produce a plausible curve, not measurements of any market. The presets differ by segment because the pattern differs by segment in ways that are widely observed — trucks and body-on-frame SUVs have tended to hold value comparatively well, premium brands have tended to give up more early, and electric vehicles have moved with battery technology, incentive changes and model refreshes rather than tracking anything stable. None of that is a promise about your vehicle, and any of it can reverse when supply, fuel prices or incentives change.
The check that actually matters takes ten minutes: search listings for your exact year, trim and rough mileage within driving distance, and see what the asking prices look like. Then discount for the fact that asking is not selling. That single exercise beats every generic curve, including this one.
Mileage adjusts it, but does not drive it
The calculator nudges the estimate down when annual mileage runs well above 15,000 and up slightly when it runs under 5,000, because buyers do look at the odometer against the year. But the adjustment is deliberately modest, and that reflects something people find counterintuitive: a car driven very little still loses most of what a normally driven car loses. Model years turn over, generations are replaced, warranties expire on a calendar, rubber and fluids age, and the market simply prices a nine-year-old car as a nine-year-old car.
This is why the per-mile figure above carries a warning. Dividing total value lost by total miles is arithmetic anyone can do, and it produces a number that flatters high-mileage owners and terrifies low-mileage ones, neither of which reflects what is happening. Depreciation is closer to a cost of time than a cost of distance.
Using it in a real decision
Two comparisons make it concrete. First, against running costs: on most vehicles bought new, the annual depreciation figure above exceeds the entire fuel bill, often by a wide margin, which is why arguing about a few cents a gallon while ignoring resale is a mistake. Second, between options: buying a three-year-old vehicle instead of a new one skips the steepest section of this curve entirely, at the cost of a shorter remaining warranty and an unknown history. The table shows exactly which years you would be skipping and what they cost.
What this page will not tell you is what your specific car is worth, and it would be dishonest to imply otherwise. It has no knowledge of the vehicle's condition, its service history, whether it has been in an accident, what colour it is, what trim and options it carries, how many similar ones are for sale near you this month, or what any buyer is willing to pay. It applies rates you supplied to a price you supplied. Treat the output as a way of thinking about the shape of the loss, then go and find out what the market says.
Questions people ask
Should sales tax, registration and fees go into the purchase price?
No. Enter what the vehicle itself cost after any negotiated discount and leave taxes, title, registration and dealer fees out. Those are real money and you should count them somewhere, but they are not value the vehicle carries — nobody buying your car later pays you back for the sales tax you paid on it. Including them inflates both the starting point and every figure derived from it, and makes the depreciation percentage look worse than the vehicle deserves. Put acquisition costs in the ownership-cost calculation instead, where they belong as a one-off expense of getting the car on the road.
Why do electric vehicles depreciate differently?
Their resale market has been unsettled in ways gasoline vehicles are not, and it moves for reasons outside the individual car. Purchase incentives change what a comparable new vehicle effectively costs, and a used one has to compete with that moving target. Battery capacity and charging speed have improved noticeably between model generations, so an older vehicle is not merely older but slower to charge and shorter of range than its replacement. Buyers vary in how much they worry about battery health and out-of-warranty replacement, whether or not that worry is justified. The preset here is deliberately conservative and may be too harsh for a particular model. It is one of the cases where checking actual listings matters most, because the spread between models is enormous.
Is a trade-in offer the same as the value here?
No, and expecting it to be leads to a bad afternoon at a dealership. A trade-in offer is a wholesale price. The dealer has to recondition the vehicle, floor it on the lot for however long it takes to sell, provide whatever warranty is required or expected, and make a margin, and the offer accounts for all of that before it reaches you. A private sale generally realises more, because you keep the margin, but you do the work: photographs, listings, messages, no-shows, test drives, a safe payment method and the paperwork to transfer title. The figure on this page is closer to a retail-ish estimate than a wholesale one, which means a trade-in offer below it is normal rather than an insult.
How do I turn this into an annual cost of ownership?
Take the value today and the value you expect at the point you plan to sell, subtract, and divide by the number of years between them. That yearly figure belongs alongside insurance, fuel, registration and maintenance in your total, and on most vehicles bought new it will be the largest of them. Two things make it more honest. Use a realistic sale price rather than a hopeful one — check what comparable vehicles actually list for at that age. And be honest about the holding period, because the average annual cost falls the longer you keep the car: the steep years are behind you and the flat tail is cheap. A car sold at three years and a car sold at ten have completely different depreciation profiles even though it is the same vehicle.