1. What is Car Depreciation?

Car depreciation refers to the decrease in a vehicle's value over time. The depreciation rate varies by make, model, and market conditions, with most cars losing 15-25% of their value per year.

2. How Does the Calculator Work?

The calculator uses the depreciation formula:

Where:

• Initial Value — Original purchase price of the vehicle
• Depreciation Rate — Annual percentage value loss (model-specific)
• Years — Time since purchase (can include fractions of a year)

Explanation: The formula calculates compound depreciation over time, accounting for the fact that depreciation applies to the remaining value each year.

3. Importance of Depreciation Calculation

Details: Understanding depreciation helps with financial planning, insurance decisions, trade-in valuations, and lease negotiations.

4. Using the Calculator

Tips: Enter the original purchase price, model-specific depreciation rate (research your make/model), and years owned. Use decimal values for partial years.

5. Frequently Asked Questions (FAQ)

Q1: What's the average car depreciation rate?
A: Most cars depreciate 15-25% per year, with luxury vehicles often depreciating faster (25-30%+) and some rare models depreciating slower.

Q2: When does a car depreciate the most?
A: The steepest depreciation occurs in the first year (20-30%) and continues rapidly for the first 3-5 years.

Q3: Which cars hold their value best?
A: Trucks, SUVs, and certain brands (Toyota, Subaru) typically have lower depreciation rates than luxury sedans or electric vehicles.

Q4: Can I use this for lease calculations?
A: Yes, leases are based on projected depreciation. The residual value is what the car is expected to be worth at lease end.

Q5: How accurate is this calculator?
A: It provides a theoretical estimate. Actual market value depends on condition, mileage, location, and market demand.