How to make decals look faded?

try brushing numerous coats of white vinegar on them.

After protecting them with a dull clear coat,I usually filter,wash,and weather them right along with the whole vehicle,including pigments or pastels

I airbrush a coat of the base color over decals, using a very low flow rate.  This actually does two things- it gives a faded appearance, and gives a shine close to base coat (matt or gloss).  I tend to go heavier on top/horizontal surfaces, less on vertical surfaces, do not overcoat at all on bottom surfaces (most fading is from sunlight).