How it works
The first decline is applied once, in the first year of your projection. The later decline then compounds on whatever value is left. A 12% annual decline takes fewer dollars off each year as the value shrinks. The chart and the table show the same calculation.
A used car doesn't start depreciating from scratch the day you buy it. Enter its current price or a value you can support as the starting point, then choose assumptions for the years you plan to own it. The default 18% and 12% declines are illustrative scenarios, not measured averages or forecasts for any make.
The formula behind the estimate
Every result starts with a defined model and visible assumptions.
V₀ = starting value Vₜ = V₀ × (1 − first decline/100) × (1 − annual decline/100)^(t−1) Total depreciation = starting value − ending value
Can I calculate depreciation by model?
This tool uses your purchase value and assumed depreciation inputs; it has no model-year transaction database. Compare local listings and written offers for the exact model, trim, age and mileage, then test several assumptions. The result is a planning scenario rather than a verified forecast for a Toyota, Honda or any other model.
A worked example
Start with a $30,000 value and assume a 20% drop in the first projected year, then 10% a year after that. The modeled values are $24,000 after year one, $21,600 after year two and $19,440 after year three. Total modeled depreciation is $10,560. What you'd really get when you sell could be higher or lower.
How do I pick assumptions for the car I'll actually own?
Age alone doesn't explain price differences. Mileage, condition, accident history, service records, options, powertrain, supply and local demand all matter. A generic curve can't see a shortage, a discontinued model, a costly known problem or a change in new-car incentives, which is why the percentages are editable.
For a practical budget, start from the price you're likely to pay rather than the seller's first ask. Compare older examples with the same trim and a similar odometer reading. Listings are asking prices, not confirmed sales, but they can show when a proposed resale value is too optimistic.
How can the curve help me compare ownership periods?
A one-year purchase is sensitive to transaction costs as well as lost value. Sales tax, registration, dealer fees and selling costs aren't included here. Keeping the car longer can spread those costs over more years, though maintenance exposure may grow. Send your chosen resale value to a full ownership-cost comparison before you decide.
With zero projected years, the result equals the starting value. A 100% first-year decline leaves a modeled value of zero. Negative rates aren't supported, so this tool doesn't model appreciation. If you're looking at a collectible or an unusual market, seek specialist comparables rather than forcing a standard curve to fit.
Questions worth asking
Are the default depreciation rates based on live prices?
No. They're plain planning assumptions. The tool has no listing feed, transaction database or appraisal connection behind it.
Which price should I enter for a used car?
Use its current value or the price you expect to pay. The first-year percentage then applies to the first year you own it, not to the year it was built.
Can a car lose more value than these estimates?
Yes. Condition, accidents, repairs, demand and local market conditions can cause losses that a smooth curve doesn't predict.
Does depreciation include loan interest?
No. Depreciation is just the starting value minus the ending value. Interest and running costs belong in a separate ownership-cost budget.
Why does the dollar loss shrink each year?
Because the yearly percentage is applied to a balance that keeps getting smaller. The same percentage of a smaller value is fewer dollars.
This is general information, not personalized financial advice. Read the limitations.
