← Guides · November 12, 2026
Car Depreciation Explained: How Much Value You Lose and How to Estimate It
Depreciation is the difference between what you pay for a car and what you can sell it for later. You never write a check for it, which is why people underestimate it. But for most cars it is the single largest cost of owning one.
How depreciation works
Cars generally lose value fastest in the first years and more slowly later. Age, mileage, condition, model reputation and market demand all affect the price. The exact curve is different for every model, so any general percentage is only a rough guide.
A simple way to estimate resale value
- Find the same model, trim and year you will have when you plan to sell. For example, if you will keep a car 5 years, look at 5-year-old versions of that model.
- Adjust for the mileage you expect to reach.
- Compare several listings, not just one.
- Choose a cautious number. If in doubt, assume a little less.
The calculator asks for resale value as a percentage of the purchase price. If you pay $30,000 and think it will sell for $15,000, that is 50%.
Why a few points matter
Using the calculator with the default example (a $30,000 car kept 5 years, paid in cash, with the other costs unchanged):
| Resale value | Cost per month |
|---|---|
| 40% ($12,000) | $667 |
| 50% ($15,000) | $617 |
| 60% ($18,000) | $567 |
Every 10 points of resale value changes the monthly cost by $50, just from the depreciation. This is why picking models that hold their value, and a sensible ownership period, can matter more than a small difference in purchase price.
Ways to reduce depreciation
- Buy used: the first owner absorbed the steepest drop. See new vs used.
- Keep the car longer: see how long to keep a car.
- Drive fewer miles and keep service records. Both help at resale.
- Choose models with a good resale record, but check actual listings rather than trusting general claims.
Depreciation and taxes
If you use a car for business, tax rules for deducting vehicle costs vary by country and change over time. Check your tax authority or a qualified professional rather than assuming that your depreciation is deductible.
Numbers are illustrative. Used-car prices change with the market, so check current listings. This is not financial advice.
More guides
- Car Maintenance and Insurance Budget: What to Set Aside Each Year
- Cost Per Mile of Driving: How to Calculate It and What to Do With It
- Financing vs Paying Cash for a Car: What the Interest Really Costs
- Fuel Cost and MPG: How Much Does Fuel Economy Really Save?
- How Long Should You Keep a Car? A Cost-Per-Month View
Written by the Wheelwise editorial team. Figures are illustrative and rules change, so check official sources. See how we write and update guides on the About.