A worked example: ₹10,00,000 car, 15% per year, after 5 years
A ₹10,00,000 car depreciating 15% per year is worth ₹4,43,705.31 after 5 years — a total loss of ₹5,56,294.69, more than half its original price.
The formula: declining balance, not straight-line
Current value = purchase price × (1 − depreciation rate)^years. Each year's 15% applies to that year's already-reduced value, not the original price — this is why it's called declining-balance depreciation, and it's the conventional method used for vehicles.
Why year 1 loses more rupees than year 5: a side-by-side
In year 1, the same ₹10,00,000 car drops from ₹10,00,000 to ₹8,50,000 — a ₹1,50,000 loss. By year 5, the car drops from ₹5,22,006.25 to ₹4,43,705.31 — a loss of only ₹78,300.94, about half of year 1's rupee loss, even though the percentage rate never changed. 15% of a smaller number is a smaller number.
Why the first year is often steeper still
Real cars often depreciate even faster than this calculator's constant rate in year 1 specifically (sometimes 20-25%) — a new car becomes legally "used" the instant it's registered, and buyers pay a premium for an unregistered vehicle that the very next owner can no longer claim.
What this estimate can't capture
This applies one flat annual rate regardless of mileage, condition, or accident history — real resale value can land meaningfully above or below this estimate depending on those factors. Checking current listings for a similar make, model, year, and mileage gives a more accurate figure than a formula alone.