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 of ownership.

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

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

3. Importance of Depreciation Calculation

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

4. Using the Calculator

Tips: Enter the original purchase price, estimated resale value, and number of years owned. For accurate results, use realistic resale values based on your vehicle's make, model, and condition.

5. Frequently Asked Questions (FAQ)

Q1: How much does a car depreciate per year?
A: On average, cars lose 15-20% of their value per year, with the highest depreciation occurring in the first year.

Q2: Which cars depreciate the fastest?
A: Luxury vehicles and cars with poor reliability ratings typically depreciate faster than economy cars and trucks.

Q3: Is this the only depreciation method?
A: No, this is straight-line depreciation. Other methods like declining balance may better reflect actual market depreciation.

Q4: Can I reduce my car's depreciation?
A: Regular maintenance, keeping mileage low, and avoiding modifications can help maintain resale value.

Q5: Does this account for market fluctuations?
A: No, this is a basic calculation. Actual depreciation may vary based on market conditions and vehicle demand.