A typical car loses roughly 15–20% of its value every year — but that average hides the real pattern. The first year is by far the steepest, then the curve flattens. Knowing the rate year by year is the difference between guessing your car’s future value and pricing it within a few hundred dollars.
Typical depreciation by year
As a rough industry baseline, a new car drops about 20% in year one, then around 15% of its remaining value each year after that. Because it compounds, that lands near 40–50% lost by year five — so a $32,000 car is often worth $16,000–$19,000 at the five-year mark.
The formula
Depreciation compounds, so each year the car keeps (1 − rate) of the prior year’s value: value = price × (1 − rate)^years. At a 15% rate, a $32,000 car is worth $32,000 × 0.85^5 ≈ $14,200 after five years. The car depreciation calculator runs this curve and shows the value and the loss for every year.
Which cars hold their value
Depreciation isn’t the same for every car. Trucks, popular SUVs, and a few value-holding brands keep more of their price; luxury sedans, fast-moving-tech EVs, and soon-to-be-redesigned models drop faster. High mileage, accidents, and a worn interior all push the loss beyond the baseline rate.
Why it matters when you buy
Because year one is the steepest, buying a one- to two-year-old car lets the first owner absorb the worst of the drop — usually the single biggest money-saver in car ownership. Fold depreciation into the full picture with the cost of ownership calculator, where it’s almost always the largest line.