Car Depreciation Calculator
Estimate how much value your car will lose over time — the cost most running-cost calculators leave out.
How does the depreciation calculator work?
Cars lose value fastest in their first year, then the annual percentage loss gradually tapers off as they age. This calculator applies a tapering depreciation curve — a larger percentage loss in year one, smaller percentages in subsequent years — based on which of three general speed categories you select, rather than a single flat annual rate, since a flat rate would understate the first-year hit and overstate later-year losses.
This is a pattern, not a prediction. Unlike our other calculators, which use official DVLA, HMRC, or Sentencing Council rates, depreciation is entirely market-driven. Two identical cars can depreciate differently based on colour, optional extras, service history, and simply what buyers want that year. Use this for budgeting and general planning, not as a substitute for a real valuation.
3 worked examples
Example 1 — New car, average depreciation, 3-year projection
A £25,000 new car, average depreciation speed, projected 3 years ahead.
£25,000 × 0.80 = £20,000
Year 2 (13% loss on remaining value):£20,000 × 0.87 = £17,400
Year 3 (11% loss on remaining value):£17,400 × 0.89 = £15,486
Result:Estimated value after 3 years: ~£15,500 — a loss of roughly £9,500, or 38% of the original price.
Example 2 — Used car, checking current position
A car bought new for £20,000, now 4 years old, average depreciation speed.
Year 1: -20% → £16,000 · Year 2: -13% → £13,920 · Year 3: -11% → £12,389 · Year 4: -10% → £11,150
Result:Estimated current value: ~£11,150 — around 44% of the original price lost over 4 years.
Example 3 — Slow vs fast depreciation, same starting price
Two identical-priced £30,000 cars after 5 years — one with slow (reliable brand) depreciation, one with fast (luxury/less reliable) depreciation.
Estimated value after 5 years: ~£15,900 (about 53% retained)
Fast depreciation:Estimated value after 5 years: ~£9,600 (about 32% retained)
Result:The same purchase price can result in a £6,300 difference in value after 5 years, purely based on brand and depreciation category — this is why depreciation speed matters as much as purchase price when budgeting.
Typical depreciation curves
These are general patterns based on widely reported industry trends, not fixed rates for any specific car:
| Year | Slow | Average | Fast |
|---|---|---|---|
| Year 1 | 15% | 20% | 30% |
| Year 2 | 10% | 13% | 18% |
| Year 3 | 9% | 11% | 15% |
| Year 4 | 8% | 10% | 12% |
| Year 5+ | 7% per year | 9% per year | 10% per year |
Each year's percentage applies to the remaining value at the start of that year, not the original price — this is why the £ amount lost shrinks each year even though early percentages look large.
What affects depreciation speed
- Brand reliability reputation — brands known for reliability (Toyota, Honda, Lexus) typically hold value better than average
- Mileage — higher-than-average mileage for the car's age accelerates depreciation
- Condition and service history — a full main-dealer service history and good condition significantly help resale value
- Colour — genuinely affects resale; white, black, silver and grey are generally safer choices than unusual colours
- Fuel type and market sentiment — policy changes (like ULEZ/clean air zones) and shifting demand can accelerate or slow depreciation for specific fuel types
- Number of previous owners — more owners typically means lower resale value, even at the same age and mileage
Do EVs depreciate differently?
Electric vehicle depreciation patterns have been less predictable than petrol and diesel historically, for a few reasons: rapidly improving battery technology can make older EVs look outdated faster, government incentive changes affect demand, and buyer uncertainty about battery health and replacement cost adds a discount some buyers apply. Some EV models have depreciated faster than equivalent petrol cars as a result, while others (particularly well-reviewed models with strong range) have held value comparably. If you're specifically comparing EV vs petrol costs including this factor, see our EV vs Petrol Calculator for the running-cost side of that comparison.
What this calculator can't tell you
Your specific car's actual value
This is the most important limitation on this page. Two cars of the same make, model, and age can be worth meaningfully different amounts based on mileage, condition, colour, and local market demand. For an actual number, use a dedicated valuation tool (Parkers, What Car?, Auto Trader, CAP HPI) that references real sold-price data for your specific car.
Sudden market shifts
Depreciation curves assume relatively stable market conditions. Fuel price spikes, new emissions regulations, or a manufacturer discontinuing a model can all cause sudden, non-linear shifts in resale value that this smooth curve can't predict.
Finance and PCP settlement figures
If your car is on finance, your actual "equity" position depends on your specific finance agreement's settlement figure, which can differ from simple market depreciation, especially with PCP agreements that have a Guaranteed Minimum Future Value built in.
Common mistakes
Ignoring depreciation entirely when comparing running costs
It's the cost most drivers forget to budget for, precisely because no bill ever arrives for it. Our Car Running Cost Calculator deliberately excludes depreciation from its total for accuracy reasons — this tool exists to let you add your own estimate back in.
Applying a flat annual rate instead of a tapering one
Treating depreciation as, say, "10% a year forever" significantly understates the first-year loss and overstates losses in later years. The real pattern front-loads much more of the loss into year one.
Assuming all cars depreciate at the same rate
Brand, reliability reputation, and market demand cause genuinely large differences, as Example 3 above shows — a £6,300 gap on identical purchase prices purely from depreciation category.
Forgetting extras don't hold their value
Optional extras (leather seats, upgraded infotainment, premium paint) rarely add back their original cost to resale value — they typically depreciate even faster than the base car.
How to minimise depreciation loss
- Consider buying used instead of new — letting the first owner absorb the steepest year-one loss is the single biggest lever available
- Choose a reliable, popular model — resale demand tracks reliability reputation closely
- Keep mileage average or below for the car's age relative to typical UK driving
- Maintain a full service history, ideally with dated receipts and stamps, not just verbal confirmation
- Choose a safe, common colour if resale value matters to you — white, black, silver, and grey are consistently the safest choices
- Avoid heavy customisation that narrows your pool of future buyers
🚗 See your full annual running costs
Depreciation is just one piece. Add fuel, insurance, tax, MOT and servicing for the complete picture of car ownership costs.
Use the Running Cost Calculator →How we calculate
Value after year N = Price × (1 − rate₁) × (1 − rate₂) × … × (1 − rateₙ), where each rate is looked up from the depreciation speed table above (using the "Year 5+" rate for any year beyond 4).
If you enter a car age above 0, the calculator first works out the estimated value today using this method, then continues applying the same tapering curve for your projection period from that point.
Frequently asked questions
How much does a new car depreciate in the first year?
Typically 15–35% depending on the brand and model, with 20% being a reasonable average estimate for a mainstream car. Premium and less-reliable brands can lose more; reliable, popular brands often lose less.
Is this calculator accurate for my specific car?
No — it shows a general pattern for budgeting purposes, not a valuation. Actual depreciation for a specific car depends on mileage, condition, colour, service history, and market demand. Use a dedicated valuation tool like Parkers or CAP HPI for an actual figure.
Do electric cars depreciate faster than petrol cars?
It varies by model. Some EVs have depreciated faster than equivalent petrol cars due to rapidly improving battery technology and buyer uncertainty about battery health, while well-reviewed models with strong range have held value comparably to petrol equivalents.
Why does the calculator show a bigger percentage loss in year 1 than later years?
This matches real-world depreciation patterns — cars lose the most value in their first year, then the annual percentage loss gradually tapers as the car ages. A flat annual rate would misrepresent this pattern.
Should I include depreciation when comparing running costs?
Yes, if you want the true total cost of ownership — but it's normal for running-cost calculators (including ours) to show it separately, since it depends heavily on the specific car and isn't a bill you're actually sent.
References & data sources
- Industry-published residual value patterns — the depreciation curves used here reflect widely reported general patterns from UK motor trade valuation guides and market analysis, not a single official source. Depreciation, unlike VED or penalty points, is not government-set.
- RAC and consumer motoring press — general reporting on typical UK first-year and multi-year depreciation ranges, used to sense-check the slow/average/fast categories.
For an actual valuation of a specific vehicle, use a dedicated valuation service such as Parkers, What Car? Valuations, Auto Trader, or CAP HPI, which reference real transaction data for that exact make, model, age, mileage, and condition. This calculator is for general budgeting only.