How is this calculated?
Straight-line annual depreciation = (purchase price - salvage value) / useful life Declining balance value = purchase price * (1 - rate)^years Default market curve = year 1 loss of 25%, years 2-5 loss of 15% per year
Example: a $35,000 car with a 25% first-year loss is worth $26,250 after one year. If it then loses 15% in year two, the value becomes $22,312.50.
How do I use this calculator?
- Choose the unit or currency setting that matches your vehicle data.
- Enter the required vehicle, route, fuel, weight or loan values in the calculator form.
- Review inline warnings and correct any missing or negative inputs.
- Read the live result card for the primary answer and supporting totals.
- Use the worked example if you want to check the formula with sample values.
- Copy, share or print the results for comparison or record keeping.
What do the terms mean?
- Salvage value
- Estimated value at the end of useful life.
- Straight-line
- A method that subtracts equal depreciation each year.
- Declining balance
- A method that applies a fixed percentage loss to the remaining value.
- Market curve
- A simplified vehicle resale pattern using heavier early depreciation.
- Percent lost
- Total depreciation divided by original purchase price.
What are real-world examples?
| Scenario | Inputs | Result | Notes |
|---|---|---|---|
| New sedan | $32,000 at 3 years | $19,508 | Default curve |
| Luxury SUV | $72,000 at 5 years | $31,932 | Higher early loss common |
| Work van | $48,000 at 4 years | $29,479 | Fleet condition matters |
| Straight-line asset | $50,000, $8,000 salvage | $29,000 at year 3 | 7-year useful life |
What tips improve accuracy?
- Condition, accident history and mileage can move real resale value sharply.
- Use actual comparable listings for final buy/sell decisions.
- Luxury vehicles often depreciate faster in dollars even when percentages look similar.
- Popular trucks and hybrids can retain value better in tight markets.
- For taxes or accounting, follow your local rules rather than a consumer estimate.
- Keep service records to defend resale value.
Did you know? EPA estimates commonly use 8.89 kg CO2 per gallon of gasoline and 10.18 kg CO2 per gallon of diesel for tailpipe carbon dioxide calculations.
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Frequently asked questions
Depreciation Calculator
A depreciation calculator estimates how much value a vehicle may lose over time. It is useful for buyers, sellers, finance teams, and business owners because depreciation affects resale value, trade-in value, lease pricing, and tax planning. The main inputs are purchase price, current market value, age, mileage, accident history, condition, and vehicle demand. It is only an estimate, because real value comes from the market and the vehicle's actual condition.
How do you calculate depreciation on a car
Car depreciation is the difference between what the vehicle was worth before and what it is worth now. A simple formula is purchase price minus current market value. To find the percentage, divide that loss by the purchase price and multiply by
How do you calculate car depreciation for tax purposes
For tax purposes, first confirm whether the vehicle is used for business. In the U.S., many taxpayers choose either the standard mileage method or the actual expense method. If standard mileage is used, depreciation is already built into the rate, so you usually do not claim separate depreciation. If actual expenses are used, depreciation may follow IRS limits and methods such as MACRS or Section 179 rules. Keep mileage logs and receipts.
How to calculate car depreciation per mile
Depreciation per mile shows how much value the car loses for every mile driven. Use this formula: starting value minus ending value, divided by miles driven during that period. For example, if a vehicle drops from $25,000 to $20,000 over 20,000 miles, depreciation is $5,000 divided by 20,000, or 25 cents per mile. This is helpful when comparing ownership cost, delivery use, rideshare use, or business mileage.
How to calculate depreciation of a car after an accident
After an accident, depreciation is usually called diminished value. The simple idea is to compare the vehicle's market value before the accident with its market value after proper repair. Even if repairs are excellent, many buyers pay less for a vehicle with accident history. Use similar listings, repair invoices, severity of damage, mileage, and an appraisal. Insurance formulas may be used, but a real market appraisal gives a better customer explanation.
How to calculate used car depreciation
Used car depreciation is calculated by comparing the price you paid with today's realistic market value. Look at private-party, dealer retail, and trade-in values for the same year, make, model, trim, mileage, and condition. The formula is purchase price minus current value. The percentage is that loss divided by purchase price. Used vehicles often depreciate slower than new ones, but high mileage, poor maintenance, accidents, and low demand can increase the loss.