Car depreciation calculator

  • See what your car will be worth in 1 to 5 years
  • See how much value it loses each year
  • Adjust the depreciation rate for your car
  • Understand the balloon payment on PCP deals
  • No sign-up required

Updated August 2026 · based on typical UK depreciation patterns

New car in dealership showroom

Car depreciation calculator

Enter what you paid, how many years you'll keep the car and the depreciation rate. The default rates reflect a typical UK car: a bigger drop in year one, then a steadier fall.

£
yr
%
%
Value after 5 years
£8,898
That's a loss of £16,102 from the £25,000 you paid.
Value kept
36%
Total lost
£16,102
Lost per year
£3,220
Lost per month
£268
Depreciation varies a lot by make, model, mileage and condition, so treat this as an estimate, not a valuation. For a figure specific to your car, check a valuation tool or get a dealer or WeBuyAnyCar-style quote. The default rates here reflect a common pattern: a steep first-year fall, then a gentler decline.

Figures are illustrative only and not financial advice. Real values depend on the exact car, its history and the market at the time you sell. For how car finance is regulated, see the FCA guide to car finance.

Sources

How car depreciation works

Depreciation is the gap between what you pay for a car and what it's worth when you sell it. For most people it's the single biggest cost of running a car, bigger than fuel, insurance or servicing. And it's the cost nobody sees on a monthly statement, so it's easy to ignore until the day you come to sell.

The pattern is fairly consistent. A new car loses the most in its first year, often between 15% and 35% of the price. After that the fall settles into a steadier 15% to 20% of the remaining value each year. So a car doesn't lose the same number of pounds every year. It loses a percentage of a shrinking figure, which is why the drops get smaller in cash terms as the car ages.

A worked example on a £25,000 car

Say you pay £25,000 for a new car and keep it five years, with a 25% first-year drop and 17% each year after. Here's roughly how the value falls:

AgeValueLost that year
New£25,000–
1 year£18,750£6,250
2 years£15,563£3,188
3 years£12,917£2,646
4 years£10,721£2,196
5 years£8,898£1,823

After five years the car is worth roughly £8,900, so you've lost about £16,100. That works out at around £3,200 a year, or £268 a month, just in falling value. The calculator above lets you change the price, the years and both rates to match your own car.

Why the first year hurts most

A car stops being new the second it's registered. Even with delivery mileage, a buyer won't pay the full new price for it, so the value drops the moment it leaves the forecourt. That's why buying a car that's already one or two years old can save you a big slice of the depreciation while still getting a nearly-new car. Let someone else take the first-year hit.

What makes a car hold its value

Some cars fall slowly, others drop like a stone. The difference comes down to second-hand demand. Cars that hold value well tend to share a few traits:

  • Popular models from brands with a solid reliability reputation
  • Average or below-average mileage for the age
  • Common, easy-to-sell colours (black, grey, white, silver)
  • Full service history and good condition
  • Petrol or hybrid in segments where used buyers still want them

Things that speed depreciation up: high mileage, an unusual colour, a poor service record, or the model being replaced by a newer version that makes yours look dated.

How this ties into PCP finance

Depreciation is the reason the balloon payment exists on a PCP deal. The lender predicts what the car will be worth at the end of the agreement and calls it the Guaranteed Minimum Future Value, or GMFV. You only pay interest and monthly payments on the value the car loses during the deal, not the part it keeps.

At the end, if the car is worth more than the GMFV, that difference is equity you can put towards your next car. If it's worth less, you hand it back and the finance company carries the loss. Understanding the depreciation curve helps you judge whether paying the balloon and keeping the car is a good deal, or whether you're better off handing it back. If you're weighing up finance types, our PCP vs HP comparison shows how the total cost differs.

Common questions

A new car typically loses 15% to 35% of its value in the first year, then around 15% to 20% of its remaining value each year after that. As a rough guide, many cars are worth about 60% of what you paid after three years and roughly 40% after five years. The exact rate depends on the make, model, mileage, condition and how desirable the car is second-hand.
A car stops being new the moment it's registered and driven off the forecourt. Buyers won't pay the full new price for a car with one owner and delivery mileage on it, so the value drops sharply straight away. The first year carries the biggest single fall, which is why buying a car that's one or two years old can save you a large chunk of the depreciation.
Cars in strong second-hand demand hold value best: popular models from brands with a good reliability reputation, in common colours, with average or below-average mileage and full service history. Some prestige and specialist models depreciate slowly. High-mileage cars, unpopular colours and models being replaced by a new version tend to fall fastest.
Yes. Higher mileage means more wear and a shorter remaining life, so it lowers the value. As a guide, average UK mileage is around 7,000 to 8,000 miles a year. A car well above that average for its age will be worth less than one below it, all else equal. This matters on PCP too, where you agree a mileage limit up front.
On PCP the lender sets a Guaranteed Minimum Future Value (GMFV), their estimate of the car's worth at the end of the deal. If the real value is higher than the GMFV, that difference is equity you can put towards your next car. If it's lower, you can just hand the car back. Depreciation is the whole reason the balloon payment exists, so understanding it helps you judge whether keeping the car is worth it.

Working out a monthly budget for your next car? Use the PCP calculator or HP calculator, and check your take-home pay to see what you can comfortably afford.