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Car Depreciation Calculator
You can use our car depreciation calculator to determine the depreciated value of a used car you want to buy or sell. This is a helpful tool that can help you strike a justified car deal whether you’re selling or buying a used car.
What is depreciation?
Ever wondered why a used item sells for a lesser price than the same brand-new item? Its because the product in question has depreciated in value. Depreciation is the reduction in worth of an item over time due to use, wear and tear and the arrival of newer items in the market with advanced features, in this case, cars.
This is already an obvious phenomenon. However, less obvious is the fact that the depreciation can be precisely calculated. People often intuitively set up a depreciation value of used cars which is speculative and at best, a rough approximation. This has the potential to cause an unintentional loss in a bargaining deal.
To counter this, you can simply calculate car depreciation with our car value estimator. It employs the car depreciation formula which is discussed in detail below.
Car depreciation formula
To calculate the used car’s value, we need certain input variables that have been given below.
Initial Cost \(= C\)
Depreciation rate in percentage \(= r\)
Number of years car used \(= n\)
The formula for depreciation goes like this:
\(A = C \times 1+ \dfrac{r^n}{100}\)
How to calculate vehicle depreciation
Knowing the formula and the exact input variables, you can simply calculate the depreciated value of a car.
Consider this, you bought a car for $35000 that you kept for 1 year with a first-year depreciation rate of 25% and now you want to sell it. To be sure of the right price that it should sell for that no one could challenge in a bargain. Simply, input the values in the formula:
Initial cost \(= C = \$35000\)
Depreciation rate \(= r= 25\%\)
Number of years car is used \(= n = 5 years\)
Given the values,
\(A = 35000 \times \dfrac{1+255}{100} = \$8,750\)
The average value of your car that is lost after 1 year with 25 percent depreciation rate is 8,750.
Now minus this value from your car’s initial cost and you get the price at which it is justified to sell now.
Current price \(= \$35000 - \$8750 = \$25,250\)
Or if you find the math difficult, you can simply use our vehicle depreciation calculator to find out the required value.
How to use our calculator
Using our tool is exceptionally easy. It is cost and condition free and is solely to facilitate you. Follow the simple steps below to measure the value.
- First, you need to input the currency type respective to the region. For instance, if you’re striking a car deal in North America, the currency would be in USD. You can choose from USDs, Euros, Pounds and Yen.
- Then, input the initial price of the vehicle when it was brand-new.
- Now, Input the current age of the car.
- Enter the number of years that you plan to own the car, or have owned the car, (you can input this in the same box)
- Enter the depreciation rate, whether its high, low, average or you can also use custom depreciation rate for the given number of years.
- Enter the number of years for depreciation.
With all these values in place, simply press ‘calculate’ and you will have your answers along with a car depreciation chart visually illustrating the depreciation over the given number of years.