Car Depreciation Calculator
Estimate how much value a car could lose over time, the cost most running-cost calculators leave out.
How does the depreciation calculator work?
Cars generally lose the most value in their first year, and the percentage lost each year then tapers. The calculator applies a tapering curve, with a bigger percentage loss in year one and smaller ones afterwards, rather than a single flat rate. The curve you pick (slow, average or fast) sets the percentages.
This is a pattern, not a prediction. Our tax and fee calculators use official rates. Depreciation is market-driven, and the curves here are illustrative assumptions. Two identical cars can lose value differently depending on mileage, condition, service history and what buyers want that year. Use this for budgeting, not as a valuation.
3 worked examples
Example 1 — New car, average curve, 3-year projection
A £25,000 new car, average depreciation speed, projected 3 years ahead.
£25,000 × 0.75 = £18,750
Year 2 (14% loss on the remaining value):£18,750 × 0.86 = £16,125
Year 3 (12% loss on the remaining value):£16,125 × 0.88 = £14,190
Result:Estimated value after 3 years: about £14,190, a loss of about £10,810 (43% of the original price).
Example 2 — Used car, checking the current position
A car bought new for £20,000, now 4 years old, average depreciation speed.
Year 1: −25% → £15,000 · Year 2: −14% → £12,900 · Year 3: −12% → £11,352 · Year 4: −10% → £10,217
Result:Estimated current value: about £10,217, which is 49% of the original price lost over 4 years.
Example 3 — Slow vs fast curve, same starting price
Two £30,000 cars after 5 years, one on the slow curve and one on the fast curve.
Estimated value after 5 years: about £17,238 (57% retained)
Fast curve:Estimated value after 5 years: about £10,960 (37% retained)
Result:The same purchase price ends up about £6,278 apart after 5 years, which is why the speed you choose matters as much as the price.
The curves we use
These are the assumptions built into the calculator. They are illustrative, chosen to sit within the ranges reported by third parties (see below), and are not fixed rates for any specific car:
| Year | Slow | Average | Fast |
|---|---|---|---|
| Year 1 | 18% | 25% | 33% |
| Year 2 | 10% | 14% | 19% |
| Year 3 | 9% | 12% | 15% |
| Year 4 | 8% | 10% | 12% |
| Year 5 onwards | 7% per year | 9% per year | 10% per year |
Each year's percentage applies to the remaining value, not the original price, so the pounds lost shrink each year. Cumulative loss from new: slow 33% after 3 years and 43% after 5; average 43% and 54%; fast 54% and 63%.
What third parties report
- A Leasing.com study of the UK's 100 most in-demand new cars, reported by Motoring Research in May 2026, found the average car lost 26.7% of its value in the first 12 months.
- The comparison site Direct Gap says a first-year loss of around 15–35% is typical, rising to around 50% over three years. It doesn't attribute that range to a named study.
The average curve here loses 25% in year one and about 43% over three years, which is a little gentler than the Direct Gap figure. If you are budgeting cautiously, use the fast curve.
What affects depreciation speed
- Make, model and demand. Popular models with strong used demand usually hold value better
- Mileage. Higher than average mileage for the age tends to lower the value
- Condition and service history. A full, documented history helps resale
- Colour and specification. Common colours and popular options are often easier to sell, though the effect varies by model
- Fuel type and market sentiment. Changes in policy and demand can speed up or slow down depreciation for particular fuel types
- Number of previous owners. More owners often means a lower price at the same age and mileage
Do EVs depreciate differently?
There is no single answer. The Leasing.com study above reported individual models rather than an average by fuel type. In it, the Tesla Model 3 lost 22.13% in its first year, which the article called the best-performing EV, while the BYD Seal U plug-in hybrid lost 15.1%. Those are single models in one study, not a rule for all EVs.
Factors often discussed for EVs include fast-changing battery technology, changes to incentives, and buyer uncertainty about battery health. For the running-cost side of an EV comparison, see our EV vs Petrol Calculator.
What this calculator can't tell you
Your specific car's actual value
This is the most important limitation. Two cars of the same make, model and age can be worth quite different amounts. For a real number, use a valuation service that references actual sold prices for your car.
Sudden market shifts
The curves assume a stable market. Fuel price changes, new regulations or a model being discontinued can move values suddenly.
Finance and PCP settlement figures
If your car is on finance, your equity depends on your agreement's settlement figure, which can differ from the market value. On a PCP, the final payment is set by the lender at the start. See our PCP & HP Car Finance Calculator.
Common mistakes
Ignoring depreciation when comparing costs
It is easy to forget because no bill arrives for it. Our Car Running Cost Calculator leaves depreciation out of its total, so add an estimate from this tool when you compare cars.
Using a flat annual rate
"10% a year" understates the first-year loss and overstates later losses. Most of the drop usually comes early.
Assuming all cars depreciate at the same rate
Example 3 shows how far apart the slow and fast curves end up on the same price.
Expecting options to hold their value
Optional extras often don't add back their original cost at resale. Check what comparable cars with and without them actually sell for.
How to limit depreciation loss
- Consider buying nearly new or used. Letting the first owner take the steepest drop is often the biggest saving
- Check used-car prices for the model first. Look at what the same age and mileage actually sell for
- Keep mileage reasonable for the car's age
- Keep a full service history with receipts and stamps
- Avoid heavy customisation that narrows your pool of 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 comes from the curve table above, and years after year 4 use the "Year 5 onwards" rate.
If you enter an age above 0, the calculator works out today's estimated value with the same curve, then continues it for your projection period.
Frequently asked questions
How much does a new car depreciate in the first year?
Published figures vary. A Leasing.com study of 100 in-demand new cars found an average first-year loss of 26.7% (reported in May 2026), and a comparison site puts a typical range at around 15–35%. The calculator's average curve assumes 25%.
Is this calculator accurate for my specific car?
No. It shows a general pattern for budgeting, not a valuation. Use a valuation service for an actual figure.
Do electric cars depreciate faster than petrol cars?
It depends on the model. The Leasing.com study reported single models rather than an EV-wide average, with the Tesla Model 3 losing 22.13% in its first year. Check the used-price history of the exact model you are considering.
Why is the loss bigger in year 1 than in later years?
Cars typically lose the most value early, then the annual percentage tapers. The calculator reflects that with a tapering curve rather than a flat rate.
Should I include depreciation when comparing running costs?
Yes, for the true cost of ownership. It is usually shown separately because it depends on the specific car and isn't a bill you are sent.
References & data sources
- Motoring Research — The average car loses £43 a day in first-year depreciation (6 May 2026), reporting a Leasing.com study of the UK's 100 most in-demand new cars: 26.7% average first-year loss, and the Tesla Model 3 and BYD Seal U figures.
- Direct Gap — Car depreciation guide (September 2026). The 15–35% first-year range and about 50% over three years. These are general figures and the article doesn't name a source for them.
Both sources are commercial and unofficial, and the calculator's curves are illustrative assumptions, not published rates. For an actual valuation, use a service that references real transaction data for your exact vehicle.
Prakash
Prakash is the founder and editor of UK Driving Tools. He maintains the site's calculators and guides and checks the rates and rules they use against official UK sources, such as GOV.UK, the DVLA, HMRC and Transport for London, before publishing.
Pages are drafted with the help of AI tools and then checked by the editor. He isn't a lawyer, accountant or UK-qualified adviser, so every page lists its sources and states what its calculator can't tell you. Nothing on this site is legal or financial advice.
Pages on UK Driving Tools are drafted with the help of AI tools. Before publishing, the figures and rules on each page are checked against the official source named on the page, and calculator examples are tested against the working formula. Pages are updated when rates or rules change. Our Editorial Policy explains the full process, including how to report a mistake.
Spotted a mistake or an out-of-date rate? Let us know and we'll check it against the official source.