Car Depreciation Calculator — Resale Value & True Cost

The asset

Asset / brand tier (sets a typical curve)

Purchase price (new or as-bought)

Depreciation / yr

Years owned

yrs

Residual floor (% of price it won't fall below)

Method

Running costs / yr (insurance, servicing, tax)

What it's worth

Resale value after 5 years 0

Value retained—

Total lost to depreciation—

Depreciation per year—

Worst year (first year)—

True cost of ownership / mo—

Value over time

Resale value Value lost

Declining balance loses a fixed percentage each year, so the steepest drop is early — which is why a car loses most value in year one and why buying a two-to-three-year-old example avoids the worst of it. Straight line spreads the loss evenly and is closer to how accountants write down equipment. The residual floor stops the curve decaying to nothing, since most assets keep some scrap or trade value. Real resale depends heavily on mileage, condition, spec, colour and demand — these are typical curves, not a valuation.

How the maths works

The formula behind this calculator, with a worked example built from your own inputs.

Depreciation & true cost of ownershipDepreciate

Declining balance — loses a fixed percentage of whatever remains, so the biggest fall is in year one:

V(t) = P × (1 − d)ᵗ subject to V ≥ floor

Straight line — spreads the same total loss evenly, as accountants write down equipment:

V(t) = P − (P − floor) × (t ⁄ T)

P = purchase price · d = annual depreciation rate · t = years elapsed · T = years owned
The residual floor stops the curve decaying toward zero, since almost every asset keeps some scrap, parts or trade value.

True cost of ownership ⁄ month = [ (P − resale) + running costs × T ] ⁄ (T × 12)

Worked example: £140,000 at 20%/yr for 10 years → £15,032 resale, £124,968 lost. With £3,000/yr running costs that is £1,291/month.

About the currency selectorCurrency

Changing the currency relabels the figures — it does not convert them. There are no exchange rates involved, and nothing is fetched from the internet.

If you enter 280,000 and switch from pounds to dollars, the tool reads it as 280,000 dollars, not as a converted amount. The maths is identical in every currency because percentages, ratios and time don't care about the unit — a 25-year loan at 4.8% has the same payment-to-principal relationship whether it's in yen or rand.

What does change is formatting, which follows each region's own conventions: where the symbol sits (€ goes after the number in German), which separators are used (Switzerland uses apostrophes, South Africa uses spaces), how digits are grouped (India groups in lakhs — 1,71,120 rather than 171,120), and whether decimals exist at all (yen and won have no minor unit).

So pick the currency you're actually working in and enter local amounts. Don't enter pounds and switch to dollars expecting a conversion.

Assumptions & what these formulas ignoreImportant

Interest compounds monthly on the outstanding balance — standard for UK repayment mortgages, though some lenders calculate daily, giving slightly different totals.

Rates are assumed fixed for the whole term. In reality a fixed period ends and you revert or remortgage, so long-term totals are illustrative.

Not included anywhere: arrangement and broker fees, stamp duty, early repayment charges, void periods, maintenance, letting agent fees, income or capital gains tax, and inflation. Figures are in today's money.

Overpayment caps: many fixed deals limit penalty-free overpayments to around 10% of the balance a year.

Investment returns assume future variability resembles the past — which markets regularly break. Depreciation curves are typical patterns, not valuations; real resale depends on mileage, condition, spec and demand.

These tools are for estimating and comparing options. They aren't financial advice, and for a decision that matters it's worth speaking to a qualified adviser or broker.

Frequently asked questions

Direct answers about this calculator.

How fast does a car depreciate?

Most cars lose value on a declining-balance curve, meaning a fixed percentage of the remaining value each year, so the steepest drop is in year one. A 140,000 car depreciating 20% a year is worth about 15,032 after ten years, having lost 124,968. Luxury cars typically depreciate faster in percentage and cash terms, while supercars and classics hold value far better. This is why buying a two or three year old car avoids the worst of the curve.

What is the true cost of owning a car?

True cost of ownership combines depreciation with running costs, divided by the months owned: [ (price - resale value) + running costs x years ] / (years x 12). For a 140,000 car held ten years with 3,000 a year running costs, that is about 1,291 per month, of which roughly 1,041 is depreciation alone. Depreciation is usually the largest cost of car ownership and the one people overlook, because it never arrives as a bill.

What is a residual floor in depreciation?

The residual floor is the value an asset will not fall below however long it is kept, expressed as a percentage of the purchase price. It exists because declining-balance depreciation never mathematically reaches zero, but real assets stop at some scrap, parts or trade value. Electronics have a very low floor of around 6%, mainstream cars around 18%, and collectible cars 45% or more.

About these calculators

How the numbers are produced, what they are not, and where to get regulated advice.

How the numbers are produced

Every figure comes from a published formula shown openly in the How the maths works section, alongside a worked example built from your own inputs. Nothing is estimated, weighted or adjusted behind the scenes.

The calculations run entirely in your browser. Nothing is stored, no accounts, no tracking, no adverts, and no affiliate links to mortgage or insurance products. Nobody pays to appear here, so there is no incentive to nudge a result in any direction. The one time anything leaves your device is if you click Update to latest figures on the inflation tab — that makes a single request to the World Bank's open data API for newer price indices, and sends nothing about you. Every other figure, including the bundled inflation history, is already in the page.

Default rates and depreciation curves are typical illustrative figures, not live market data. The tools do not fetch interest rates, house prices, exchange rates or resale values from anywhere.

Limitations — read before relying on this

These are estimating tools for comparing options, not a substitute for professional advice. In particular:

· Figures exclude fees, stamp duty, early repayment charges, tax, void periods, maintenance and inflation.
· Rates are assumed fixed for the whole term; in reality fixed periods end and you revert or remortgage.
· Investment simulations assume future variability resembles the past — which markets regularly break. They show modelled uncertainty, not a forecast.
· Depreciation curves are typical patterns, not valuations. Real resale depends on mileage, condition, spec and demand.
· Changing currency relabels figures; it does not convert them.

For a decision that matters, speak to a qualified mortgage broker, accountant or FCA-regulated financial adviser. Nothing here is financial advice.

Sources & further reading

For impartial, regulated guidance in the UK:
· MoneyHelper — the government-backed free money guidance service
· MoneySavingExpert — mortgage guides and comparison tools
· Bank of England — current Bank Rate
· GOV.UK — Stamp Duty Land Tax
· FCA — checking an adviser is regulated

The amortisation, yield and depreciation formulas used here are standard published finance formulas, not proprietary methods — you are encouraged to check them against any other source.

Car Depreciation & True Cost of Ownership Calculator