GarageCalc There is no single annual depreciation rate that predicts every car's resale value. A market study measures cars sold during a particular period. A depreciation calculator applies the rates you choose. Keeping those two things separate makes the estimate useful.
What does recent US market data show?
The iSeeCars study published March 24, 2026 reported average five-year depreciation of 41.8%. Its sample covered more than 950,000 five-year-old used cars sold from March 2025 through February 2026. That leaves 58.2% of original value in the study's aggregate comparison.
The study compares modeled used asking prices with original MSRPs adjusted to 2026 dollars. It is not a calculation from each owner's actual purchase and sale receipts. Heavy-duty trucks, vans and some discontinued or low-volume models are excluded.
This is a historical five-year benchmark, not a forecast for a car purchased today or a record of each year's loss. Model, mileage, condition, incentives and the resale market can produce a very different result for your vehicle.
Why dividing a five-year loss by five is misleading
Dividing 41.8% by five gives 8.36 percentage points of the original value per year. It does not give the equivalent annual loss on a shrinking balance. For a constant compounded annual rate, the calculation is:
Annual equivalent = 1 − (1 − total loss)1 ÷ years.
Using the benchmark: 1 − 0.5821/5 = approximately 10.26% per year. This is a mathematical equivalent for the endpoints, not evidence that each year actually had that loss.
Worked example: a $35,000 car
The default scenario in our car depreciation calculator assumes a 20% first-year loss, then 12% of the remaining value in each later year. These are adjustable scenario assumptions, not measured averages or rates taken from the iSeeCars study.
| End of year | Modeled value | Loss that year | Total loss |
|---|---|---|---|
| 1 | $28,000 | $7,000 | 20.0% |
| 2 | $24,640 | $3,360 | 29.6% |
| 3 | $21,683 | $2,957 | 38.0% |
| 4 | $19,081 | $2,602 | 45.5% |
| 5 | $16,791 | $2,290 | 52.0% |
Year two loses $3,360 because 12% applies to $28,000, not to the original $35,000. After five years, the model retains about $16,791, a 52.0% cumulative loss. Figures are rounded for display; calculations use unrounded balances.
That loss is larger than the study benchmark. This is not a contradiction: the scenario is a different set of assumptions. A calculator should show what those assumptions imply rather than label them a guaranteed market result.
How to choose more useful assumptions
- Match the vehicle. Compare the same model, trim and powertrain at different ages. A broad segment average can hide large differences.
- Match mileage and condition. Separate accident history, unusually low mileage and major repair needs from ordinary aging.
- Use comparable price types. A dealer listing, trade-in offer and private-sale price are not interchangeable. Asking prices are not completed-sale prices.
- Try several scenarios. Change the rates to see how much your ownership cost depends on resale value instead of relying on one precise-looking number.
Depreciation is only part of ownership cost
For an ownership period, depreciation is purchase value minus resale value. Dividing that loss by months owned gives a monthly equivalent, not a loan payment. Financing costs, insurance, maintenance, taxes and fuel remain separate. Estimate driving expenses with the fuel cost calculator and use your measured MPG when available.
For a used car, compare your actual purchase price with plausible future sale prices. Our age-based calculator begins with a price when new and models both endpoints; its modeled current value may differ from the offer you are considering.