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Last updated: December 20, 2023

Car Depreciation Calculator

Find out how much your vehicle will be worth in the coming years.

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How much value your vehicle loses over time is important. If your car loses its value too quickly, you risk owing more than it’s worth over the course of your loan — especially long-term loans — which is known as negative equity. Additionally, the less your vehicle depreciates, the more you’ll get for it if you sell or trade it in.

Enter your vehicle’s purchase price and whether you bought it used or new, and our calculator will estimate how much it’s worth depending on its age.

Why do cars depreciate?

Mileage

The higher the mileage on your vehicle, the more wear and tear it’s sustained, so the less it will be worth. Cars depreciate the most in their first 30,000 miles of use.

Make and Model

Certain makes hold their value better than others, meaning they depreciate more slowly. For example, Toyota has a reputation for long-lasting, reliable vehicles. Additionally, the more popular your car model, the less it will depreciate because it will have higher resale demand.

FUN FACT:

According to Edmunds, five of the most popular cars in the U.S. are the Chevrolet Silverado, Ford F-Series, Toyota RAV4, Ram 1500/2500/3500, and Toyota Camry.1

Condition

Damage to your car will lower its value, and so will a history of accidents (even if the car is completely repaired). If you’re trading in your car, it’s worth cleaning the inside and outside before bringing it to the dealership.

Fuel Economy

The higher your car’s average miles per gallon (mpg), the better the resale value and the less it will depreciate. Not to mention, you’ll spend less on fuel costs over the life of the car.

How to reduce your car’s depreciation

1. Keep up on maintenance.

Follow the manufacturer’s recommendation for fluid, oil, brake, and related maintenance (you can find this information in the owner’s manual or online). In addition, keep records of maintenance to show potential buyers that you’ve cared for the car.

RELATED:

Check out our complete guide to reselling your car.

2. Buy (gently) used.

Because new cars depreciate faster than used ones, buying a used car will reduce the amount of money you lose to depreciation. Additionally, insurance for used cars is usually less expensive.

Buying a car that is just one year old will allow you to retain many of the benefits of a new car — like updated technology and the manufacturer’s warranty — and cost you 80 percent of the price of a new car.

A car that is three or so model years old can save you 50 percent of the price of a new car. However, be careful that the car is in good condition, as a used car that requires expensive repairs soon after you buy it could be a worse financial decision than just buying a new car.

3. Lower your mileage.

Carpooling, taking public transportation, biking, walking, and consolidating your errands are all ways to drive less and reduce the number of miles you put on your car. Not only will that mitigate depreciation, but it can also save you money on fuel costs. And if you drive less than 10,000 miles per year, you might be able to save money with a pay-per-mile insurance plan.

4. Don’t customize your car.

Modifications like aftermarket wheels, loud exhaust systems, and custom paint jobs will reduce your car’s value. These changes can detract buyers who don’t want them or worry about whether they are properly installed.

5. Hold on to your car.

Depreciation slows down at the five-year mark and pretty much stops once the car hits 10 years. Driving and maintaining your car for as long as you can can reduce the effects of depreciation and save you money overall.

Difference in depreciation for new vs. used cars

New cars depreciate faster than used cars. In general, new cars lose 20 percent of their value after the first year. Both new and used cars lose 10 to 15 percent for the next five or so years afterward.

Used cars will save you money. New cars have the benefit of the manufacturer’s warranty and peace of mind about its condition. If you buy a new car, aim to buy a brand that holds its value well and drive the car for as long as possible in order to reduce the impact of depreciation. If you buy a used car, always get a pre-purchase inspection from a mechanic (especially in a private sale) to ensure you won’t end up with costly repairs.

TIP:

Check out our roundup of the best auto loans for new cars and the best for used cars.

Which cars best hold their value?

Analysts at Kelley Blue Book reviewed output from statistical models to determine the following vehicles have the best resale values for 2023.2

Vehicle 5-year resale value (% of initial sticker price)
2023 Toyota Tundra 73.3%
2023 Toyota Tacoma 66.0%
2023 Tesla Model X 66.0%
2023 Ford Bronco 65.4%
2023 Chevrolet Corvette 65.3%
2023 Toyota 4Runner 64.4%
2023 Honda Civic 62.5%
2023 Ford Maverick 61.7%
2023 Subaru Crosstrek 61.0%
2023 Jeep Wrangler 61.0%

What is gap coverage and do I need it?

If your new car is totaled within the first few years of ownership, due to rapid depreciation, you may owe more on the vehicle than its actual cash value (ACV). The actual cash value is how much your insurance company will payout in the event of a total loss. So, if you owe more than it’s worth, you’re not only out of a car, but you’re also on the hook for the remainder of the auto loan balance.

Gap coverage pays for the difference between what you owe on the car and its actual cash value. For example:

Factor Amount
Depreciated value of vehicle at the time of accident $20,000
Loan balance at the time of the accident $23,000
Difference between value and loan (gap) $3,000
Deductible $500
Insurance payout (value – deductible) $19,500
With gap coverage, the driver pays (deductible) $500
Without gap coverage, the driver pays (deductible + gap) $3,500

Some lenders will require you purchase gap coverage for new or leased vehicles. You’re more likely to need gap insurance if you:3

  • Put less than 20 percent down when you financed the car
  • Financed for 60 months or longer
  • Leased the vehicle
  • Bought a vehicle that depreciates more quickly than average, such as a luxury car
  • Rolled over negative equity from an old car loan into the new loan

>> Related: Lease or Purchase Car Calculator

Recap

  • The less your vehicle depreciates, the lower your risk of ending up with negative equity and the more money you’ll get during resale or trade-in.
  • Maintaining your vehicle, buying used, reducing your mileage, avoiding customizations, and holding on to your vehicle for as long as possible are ways to reduce the effects of depreciation.
  • New and used cars each come with pros and cons. New cars depreciate more quickly than used cars, though they offer peace of mind and a strong manufacturer’s warranty. A used car in good condition will usually save you money over the car’s lifetime compared to a new vehicle.
  • If you owe more on your car than it’s worth, GAP coverage pays for the difference in the loan balance in the event your car is totaled.

Citations

  1. Most popular cars in America. Edmunds. (2023).
    https://www.edmunds.com/most-popular-cars/

  2. 2023 Best Resale Value Awards: Top Cars, Trucks, and SUVs. Kelley Blue Book. (2023, Mar 5).
    https://www.kbb.com/awards/best-resale-value-cars-trucks-suvs/

  3. What is gap insurance? Insurance Information Institute. (2023).
    https://www.iii.org/article/what-gap-insurance