The rate at which your car loses value starting the year you buy it is referred to as car depreciation. In reality, the price of your new car starts to decline the moment you pull it off the dealership lot. With the aid of this car depreciation calculator, you can determine an estimated future value for your vehicle and take action to make well-informed choices regarding maintenance, trade-ins, insurance coverage, and other options.
How can you calculate your car depreciation?
Depreciation is estimated by taking a vehicle’s starting worth and adding the typical percentage decline to it for each year you intend to own it, albeit it varies by make and model. Although cars lose value with time, other aspects like accidents are also taken into account.
Generally speaking, luxury and alternative fuel vehicles depreciate more quickly than pickup trucks and other long-lasting vehicles. In the first three years alone, the value of a new car might decrease by 60%. Compared to new cars, used cars do not depreciate as quickly.
People first consider price, economy, and style when choosing an automobile. Depreciation, however, is a significant financial factor. You’ll save more money with a car that doesn’t lose value as quickly than with one that uses less gas and can go longer between fill-ups.
Formula:
The Car Depreciation Calculator uses the following formula:
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:
The average car depreciation rate is 14% per year. If you purchase a car for $30000, what is the approximate value of the car after 3 years?
Solution:
- P = $30000,
- R =14%,
- n = 3
The value of the car after n years, A = P * (1 – R/100)n
- = $30000 * (1 – 14/100)^3
- = $30000 * (1 – 0.14)^3
- = $30000 * (0.86)^3
- = $30000 * 0.6360
- = $19081.68
Answer: The approximate value of the car after 3 years is $19081.68.
Depreciation Calculator
Using this calculator, estimate the worth of your car over the course of ownership. The depreciation is computed by multiplying the anticipated ownership period by the expected rate of depreciation for the vehicle (average, high, or low). The depreciation of both new and old vehicles can be calculated using this calculator.
The outcome displays the expected depreciation over the course of the time you chose to own the vehicle, including the first year.
(Calculator Space)
How quickly does the car’s value drop?
You might be shocked to learn that the moment you buy a car, its worth drops to 91% of its original market value. Why? Well, it all depends on how the upcoming potential buyer perceives it. The car’s status changes from “new car” to “used car” at the time of purchase, and even though it has only been driven for a minute, its value is drastically reduced.
After that, the car’s value keeps decreasing yearly. The following values are used in our car depreciation calculator:
Your car’s worth drops to 81% of its original value after a year.
Your car’s value drops to 69% of its original cost after two years.
Your car’s worth drops to 58% of its original value after three years.
Your car’s worth drops to 49% of its original value after four years.
Your car’s value drops to 40% of its original cost after five years. (I’ll change it according to our calculator if possible)
Our automotive depreciation calculator makes the assumption that your car will be worth nothing in approximately 10.5 years. You will still be able to sell it to private individuals, but it will have a very low market value.
Each brand and type of automobile actually depreciates at a slightly different rate, or as we say technically, it has its own automotive depreciation rate. Nevertheless, you can use this calculator to show you what the value will be in general after a given period of time.
How to Calculate the Real Cost of Owning a Car
You’ve narrowed your search for a new car down to three well-regarded, reasonably priced compact luxury SUVs. But how can you tell which will be more expensive to maintain over time?
This Car Depreciation Calculator may help anyone in a similar situation, or anyone shopping for a new car, determine how much a vehicle will cost to maintain over the course of five years. You probably pay close attention to the car’s features, price, and warranty when you’re out looking for a new ride, but you might not be paying as much attention to the car’s ongoing operating costs.
Depreciation, fuel expenditures, maintenance, insurance, and repair costs can vary widely, even among vehicles of the same price. Whether you’re looking to compare two cars or SUVs, or something completely different, this calculator might be a helpful research tool.
If you’re trying to pick between several different automobiles, this tool can help. Suppose you’re interested in purchasing an electric car, perhaps a Tesla Model 3. Your spouse has expressed interest in upgrading to a more practical vehicle, perhaps a Nissan Leaf. If you need additional guidance in making your choice, researching the relative cost of maintaining both vehicles will help.
The Annual Expense of a Car
There are eight factors that go into calculating a vehicle’s “True Cost to Own”.
1. Car depreciation: the annual loss in value of the vehicle.
2. Finance interest: the amount of interest paid over a five-year period.
3. Taxes and fees: the annual sum of all charges associated with sales tax, licenses, and registries.
4. Insurance premiums: The typical cost of keeping a car insured.
5. Fuel: the cost of purchasing the gasoline or diesel that your car needs, either ordinary or premium.
6. Maintenance: the entire cost of carrying out all recommended maintenance listed in the owner’s manual for the vehicle.
7. Estimated repair costs: for this vehicle’s typical mechanical issues.
8. Federal tax credit: the amount of any tax credit offered for alternative fuel vehicles.
Which cars depreciate the least?
Different car models depreciate at drastically different rates. Some cars depreciate far more quickly than others. Below is the list of cars that depreciate the least according to iSeeCars:
Which cars depreciate the most?
You may also locate the vehicles that lose the greatest value according to the iSeeCars research. Alternative-fuel vehicles, such as the Nissan Leaf, Chevrolet Volt, and Ford Fusion Energy, dominate the list of cars whose value depreciates the quickest.
Conclusion
The last few years have seen a wide range in car prices, but regardless of how attractive a car may be, depreciation will still occur. Depreciation is affected by a number of variables, such as vehicle type and reliability. Because they may be less expensive to own over time or because they may be a particularly desirable vehicle type, vehicles that perform well in those areas tend to keep value.
FAQs
How much per mile does a car depreciate?
There is no standard rate of car depreciation per mile; instead, it varies greatly from vehicle to vehicle. Your best option is to go online and compare the price of your car with the number of miles driven while keeping as many other factors constant as possible.
How much does a car lose value after an accident?
The amount of damage caused by an accident determines how much a car will depreciate. Losing a wing mirror and getting involved in an accident that results in a totaled car are very different things. For the former, you can expect some depreciation, whereas the latter would depreciate significantly even after being totally fixed.
Do hybrid cars lose value more quickly?
No, hybrid vehicles lose value more gradually than gasoline-powered vehicles. When hybrid vehicles initially entered the market, this wasn’t the case, but a 2017 study discovered that the opposite is now true. So, think about purchasing a hybrid if you want your car’s worth to last longer.
