Car Depreciation Calculator – Nationwide (2024)

FAQs

How do I calculate the depreciation of my car? ›

Car depreciation varies by make and model, but you can ballpark your car's depreciated value by looking up its current market value and subtracting it from the price you originally paid for it. Kelley Blue Book, Consumer Reports, and other websites offer quick ways to look up a vehicle's market value.

Car depreciation FAQs

The rate of depreciation varies from car to car, as it depends on many factors. But KBB estimates that the average vehicle loses about 20% of its original value within the first year. Within five years, vehicles may lose an average of 60% of the original value.

Class life is the number of years over which an asset can be depreciated. The tax law has defined a specific class life for each type of asset. Real Property is 39 year property, office furniture is 7 year property and autos and trucks are 5 year property.

Real World Depreciation

While different cars depreciate at different rates, it's a good rule of thumb to assume that a new car will lose approximately 20 percent of its value in the first year and 15 percent each year after that until, after 10 years, it's worth around 10 percent of what it originally cost.

Cars lose the most value in the first year, and depreciation continues for about five years. A car can lose up to 20% of its value in the first year, and over the first five years fall to around 40% from the original price. That means it loses about 15% of the value each year after the first year.

According to some experts, mileage depreciation is about $0.08 a mile, but depreciation is more commonly measured in years than miles. If you want to calculate the depreciation for your vehicle it's best not to trust some broad percentage that's averaged out based on every make and model of vehicle.

The two biggest factors that affect car depreciation are your vehicle's age and mileage. Automakers release new models every year, “so older versions are regarded as less valuable,” says Eric Ibara, director of residual value consulting for Kelley Blue Book. And the more miles on a car, the less it's worth.

According to the IRS, taxpayers can actually depreciate the cost of a car, truck, or van over a period of six calendar years. Why? Because a vehicle is “generally treated as placed in service in the middle of the year, and you claim depreciation for one-half of both the first year and the sixth year.”

At what age do cars stop depreciating? ›

After five years, your car could be worth roughly half of what you initially paid for it. Depreciation tends to slow once a car reaches the five-year mark, and essentially stops by the time a car is 10 years old.

Above 100,000 Miles

As such, you can expect to have a hard time selling your car in this mileage bracket. Even if you manage to find a buyer, you probably won't get much from the sale.

Factors in Depreciation

The wholesale value is always less than the original retail value of the car. For a brand new car this initial depreciation can be in the thousands. How well you maintain a car, the model of the car and the mileage of the car also affect the depreciated value.

New car depreciation

A commonly quoted statistic says that new cars lose 10 percent or more of their value the minute you leave the dealer's lot, and it's true that any vehicle will lose value more rapidly during the first five years of ownership.

After a year, your car's value decreases to 81% of the initial value. After two years, your car's value decreases to 69% of the initial value. After three years, your car's value decreases to 58% of the initial value. After four years, your car's value decreases to 49% of the initial value.

A car loses about 10% of its value, on average, as soon as it's driven off the lot. In three years, it has often lost 50%.