Car Depreciation Calculator
This Car Depreciation Calculator allows you to estimate how much your car will be worth after a number of years. The calculator also estimates the first year and the total vehicle depreciation.
It is fairly simple to use. All you need to do is:
- Select the currency from the drop-down list (optional)
- Enter the purchase price of the vehicle
- Input the current age of the vehicle - if the car is new, simply input 0
- Enter the number of years you will own the car
- Select your car's depreciation rate from the drop-down list. You can choose from four car depreciation rates: high, average, low and custom:
- The low depreciation rate is usually applicable to the following car brands: Audi, Mercedes, Porsche, Land Rover.
- The average depreciation rate is usually applicable to the following car brands: Ford, Mitsubishi, BMW, Skoda, Volvo, Lexus, Kia. We recommend you use this depreciation rate as a default if you are unsure.
- The high depreciation rate is usually applicable to the following car brands: Citroen, Renault, Peugeot, Fiat.
- If you choose "Custom" - You can enter another depreciation rate for period of car ownership.
Finally, in the last step, click on the "Calculate" button to determine annual, total depreciation and estimated value of your vehicle at end of ownership period.
What is car depreciation?
This the term that defines how much your car will be worth at a particular point in the future. As a car gets older and has more miles on the clock, it inevitably is worth less. People overlook depreciation, but it is the biggest cost of ownership in many cases. When you come to trade the car in with a dealer or sell it on the open market, the depreciation will be the difference between what you paid for the car and what it is worth at the time of sale.
A new car can lose 60% of its value in the first 3 years alone. Used cars do not lose their value as much as a new car. When deciding what car to buy, people look at price, economy and style first. But depreciation is an important factor in the finance. A car that doesn't depreciate as much will save you more money than one that costs a little less to fill up and lasts longer between refuels.
Depreciation formula
The Car Depreciation Calculator uses the following formulae:
A = P * (1 - R/100) ^{ n }
D = P - A
- Where,
- A is the value of the car after n years,
- D is the depreciation amount,
- P is the purchase amount,
- R is the percentage rate of depreciation per annum,
- n is the number of years after the purchase.
Example 1:
The average car depreciation rate is 14% per year. If you purchase a car for $ 29000, what is the approximate value of the car after 5 years?
Solution:
- P = $ 29000,
- R =14%,
- n = 5
The value of the car after n years, A = P * (1 - R/100) ^{ n }
- = $ 29000 * (1 - 14/100)^5
- = $ 29000 * (1 - 0.14)^5
- = $ 29000 * (0.86)^5
- = $ 29000 * 0.4704
- = $ 13641.6
Answer: The approximate value of the car after 5 years is $ 13641.6
Example 2:
John purchased a new car for $ 30000. The value of the car depreciates by 35% in the first year and by 14% p.a. thereafter. How much will the car be worth after 3 years?
Solution:
- P = $ 30000,
- R1 =35%,
- R2 =14%,
- n = 3
The value of the car after n years, A = P * (1 - R/100) ^{ n }
The value of the car after 1 year, A = 30000 * (1 - 35/100) ^{ 1 }
- = $ 30000 * (1 - 0.35)^1
- = $ 30000 * 0.65
- = $ 19500
The value of the car after 3 years, A = 19500 * (1 - 14/100) ^{ 3-1 }
- = $ 19500 * (1 - 14/100)^2
- = $ 19500 * (1 - 0.14)^2
- = $ 19500 * (0.86)^2
- = $ 19500 * 0.7396
- = $ 14422.2
Answer: The value of the car after 3 years is $ 14422.2
You may also want to check out the Auto Lease Calculator