How to Calculate Car Depreciation
What is Car Depreciation?
Estimates how much a car's value declines annually using depreciation models. Helps calculate car ownership costs and resale value projections.
Step-by-Step Guide
- 1Apply depreciation curve (year 1: 15-20% loss)
- 2Year 2-3: 10-15% annual decline
- 3Years 4-5: 8-10% annual decline
- 4Project using mileage multiplier
Worked Examples
Input
$30k car, 3yrs
Result
$18k value
Common Mistakes to Avoid
- ✕Not accounting for mileage impact (exceeding 15k/year increases depreciation)
- ✕Ignoring market demand for specific models
Frequently Asked Questions
Why do cars lose value so fast initially?
Market premium for new features diminishes immediately; wear, maintenance history become known.
What preserves resale value?
Lower mileage, service records, desired color/options, good condition, and market demand.
Ready to calculate? Try the free Car Depreciation Calculator
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