Home
Back
Car Depreciation Formula:
| From: | To: |
Car depreciation refers to the decrease in a vehicle's value over time. It's the difference between what you paid for the car and what it's worth at any given point. Most cars lose value immediately after purchase and continue to depreciate each year.
The calculator uses the depreciation formula:
Where:
Explanation: The formula calculates the current value by applying compound depreciation over the specified number of years.
Details: Understanding car depreciation helps with financial planning, insurance decisions, resale value estimation, and determining when it might be more cost-effective to replace a vehicle.
Tips: Enter the original purchase price in dollars, the annual depreciation rate (typically between 0.15-0.25 for most vehicles), and the number of years since purchase. All values must be valid (price > 0, depreciation rate between 0-1, years ≥ 0).
Q1: What is a typical depreciation rate for cars?
A: Most cars depreciate 15-25% per year, with luxury vehicles often depreciating faster and some classic cars potentially appreciating.
Q2: Why do cars depreciate in value?
A: Factors include wear and tear, mileage, market demand, new model releases, technological advancements, and overall condition.
Q3: Which cars hold their value best?
A: Generally, reliable brands like Toyota, Honda, and Subaru have better resale value, along with some luxury brands and limited edition vehicles.
Q4: How accurate is this depreciation calculation?
A: This provides an estimate based on consistent annual depreciation. Actual values may vary based on market conditions, vehicle condition, mileage, and specific model popularity.
Q5: Can a car's value ever increase?
A: While rare, some classic, limited edition, or particularly desirable vehicles can appreciate in value over time, especially if well-maintained with low mileage.