CalculateY
Quick Answer
A $35,000 vehicle using standard depreciation rates is estimated to be worth approximately $20,089 after 3 years, losing approximately $14,911 (42.6% of its original value).
Common Examples
| Input | Result |
|---|---|
| $35,000, 3 years, standard | Estimated $20,089 (lost $14,911) |
| $30,000, 5 years, standard | Estimated $15,028 (lost $14,972) |
| $45,000, 5 years, 20% custom rate | Estimated $14,746 (lost $30,254) |
| $25,000, 10 years, standard | Estimated $8,929 (lost $16,071) |
| $40,000, 3 years, straight-line | Estimated $28,000 (lost $12,000) |
How It Works
The Formulas
Standard (Industry Curve) Method:
This method uses rates derived from industry depreciation averages. The vehicle loses a percentage of its current (not original) value each year:
- Year 1: 15%
- Year 2: 15%
- Year 3: 12%
- Year 4: 10%
- Year 5: 9%
- Year 6+: 7% per year
Value after Year N = Previous Year Value x (1 - Rate for Year N)
Straight-Line Method:
The vehicle depreciates by an equal dollar amount each year, assuming a 10-year useful life:
Annual Depreciation = Purchase Price / 10
Value after Year N = Purchase Price - (Annual Depreciation x N)
This method is simpler but less realistic for vehicles, which lose more value in early years.
Custom Rate Method:
The vehicle loses a fixed percentage of its current value each year:
Value after Year N = Purchase Price x (1 - Custom Rate / 100)^N
This is a declining-balance method identical to the standard method but with a uniform rate.
What Affects Vehicle Depreciation
Several factors influence how quickly a vehicle depreciates: brand reputation and reliability, mileage, condition, market demand, fuel type, vehicle type (trucks hold value better than sedans on average), and overall economic conditions. Electric vehicles have seen varying depreciation patterns as the market evolves.
Average Depreciation Benchmarks
Industry data suggests a new vehicle loses approximately 20% to 25% of its value in the first year, 35% to 45% over three years, and 50% to 60% over five years. These are averages, and individual vehicles may depreciate faster or slower.
Worked Example
For a $35,000 vehicle using the standard method over 3 years: Year 1: $35,000 x 0.15 = $5,250 depreciation. Value = $35,000 - $5,250 = $29,750. Year 2: $29,750 x 0.15 = $4,463 depreciation. Value = $29,750 - $4,463 = $25,288. Year 3: $25,288 x 0.12 = $3,035 depreciation. Value = $25,288 - $3,035 = $22,253. Total depreciation = $35,000 - $22,253 = $12,747 (36.4%). The vehicle retains approximately 63.6% of its original value after 3 years.