1. What is Car Depreciation?

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 when you sell it, spread over the years you owned it.

2. How Does the Calculator Work?

The calculator uses the straight-line depreciation formula:

Where:

• Purchase Price — Original cost of the vehicle ($)
• Resale Value — Estimated value at time of sale ($)
• Years — Length of ownership (years)

Explanation: This simple formula calculates the average annual depreciation by spreading the total loss in value evenly over the ownership period.

3. Importance of Depreciation Calculation

Details: Understanding depreciation helps with financial planning, insurance decisions, and determining the optimal time to sell or trade-in your vehicle.

4. Using the Calculator

Tips: Enter the original purchase price, estimated resale value, and years of ownership. All values must be positive numbers (years must be greater than 0).

5. Frequently Asked Questions (FAQ)

Q1: How accurate is this depreciation calculation?
A: This provides a simplified straight-line estimate. Actual depreciation may follow a curve, with steeper drops in early years.

Q2: What factors affect car depreciation?
A: Mileage, condition, brand reputation, market demand, fuel efficiency, and economic conditions all impact depreciation.

Q3: Do all cars depreciate at the same rate?
A: No, luxury cars typically depreciate faster while some collectible or in-demand models may hold value better.

Q4: How can I minimize depreciation?
A: Choose models with good resale value, maintain the vehicle well, keep mileage reasonable, and avoid excessive modifications.

Q5: When is the best time to sell a car?
A: Typically before major maintenance milestones (e.g., 100,000 miles) or when depreciation starts to level off (often after 3-5 years).