Car Depreciation Calculator

The depreciation schedule applies roughly 20% in Year 1, easing to 15% in Year 2, then tapering to 10-12% through Years 3-5 and eventually settling around 5-8% for older vehicles. New cars depreciate fastest because the largest single value drop -- going from "new" to "used" the moment it's driven off the lot, plus rapid early-model-year technology and warranty erosion -- happens immediately, while an already-used car has already absorbed that initial hit and depreciates more gradually from a lower base.

Yes, proportionally -- since each year's depreciation is calculated as a percentage of the prior year's value, a higher Purchase Price scales every dollar figure in the projection (Current Market Value, Total Depreciation So Far, Future Value) up by the same proportion. Retained Value %, however, stays the same regardless of Purchase Price, since it's a ratio (Future Value divided by Purchase Price) rather than a dollar amount.

Current Vehicle Age is how many years of depreciation have ALREADY happened, applied to Purchase Price to compute Current Market Value. Years to Project is how many ADDITIONAL years into the future to run the same depreciation schedule, computing Future Value from Current Market Value forward. A 3-year-old car projected 5 more years applies Year 1-3 rates to get today's value, then Year 4-8 rates to project forward.

Annual Depreciation is an AVERAGE: it's the total additional dollar depreciation expected over the projection window (Future Depreciation) divided evenly by Years to Project. Because the underlying rate schedule tapers with vehicle age, this average is typically smaller than the actual dollar amount lost in the vehicle's first year or two, especially for projections that start from an older vehicle already on the flatter part of the depreciation curve.