Financial Calculators
Car Depreciation Calculator
This calculator calculates the cost of depreciation for your car. Estimate the car's value once it has been used.
Car depreciation calculator
Car value after...
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What is depreciation and how does it work? The depreciation definition
Depreciation simply means a decrease. Imagine that you bought your car for $20,000. You might imagine that the car is no longer the same as it was when you purchased it. You will likely agree that it would be unfair to sell it for $20,000 more - you have a feeling that it is less valuable now.
Economists believe that your car has lost value over the years. They would add that the reduction of vehicle value over time is the basis of depreciation. The formal definition of depreciation is that it is the method used to calculate the cost of an asset over its life.
What Causes a Car To Depreciate
Your car's market value can be affected by many things. Some factors are easy to control, others are more difficult. Here are the main factors that contribute to car depreciation.
These are just a couple of things to keep in mind when you're evaluating your wheels.
How quickly does the value of cars drop?
There are many factors that affect how and why cars lose value. However, there is one constant: new cars tend to depreciate more quickly than used cars. How much faster? We will just say that we wish you had your seat belts on.
Initial Car Value: $30,000
Timespan| New car value
1 minute| $27,000
1 year| $24,000
2 years| $20,400
3 years| $17,340
4 years| $14,740
5 years| $12,530
What Cars Are Most Depreciating (and Which Types Less)?
Although all new cars are losing value at an alarming rate; some models retain their value better than others.
Research shows that pickup trucks are less likely to depreciate in the first five years, while electric and luxury cars lose the greatest value. Toyota and Honda have strong reputations for reliability and durability. This makes them very reliable in holding onto their value.
Here's the list of the vehicles with depreciation at the highest and lowest levels in 2019:
Top 5 Vehicles with the lowest depreciation
Rank| Model| Average 5-Year Depreciation
1| Jeep Wrangler/Wrangler Unlimited| 27.3%
2| Toyota Tacoma| 29.5%
3| Toyota Tundra| 37.1%
4| Nissan Frontier| 37.8%
5| Toyota 4Runner| 38.1%
Top 5 Vehicles with the highest depreciation
Rank| Model| Average 5-Year Depreciation
1| Nissan Leaf| 71.7%
2| Chevrolet Volt| 71.2%
3| BMW 7 Series| 71.1%
4| Mercedes-Benz S-Class| 69.9%
5| Ford Fusion Energi| 69.4%
There are pros or cons to buying a car in either the high-depreciation or low-depreciation ranges. While cars that are held at their best will be easier for people to resell, they can also be more costly to buy. While you might be able to get a great deal on an older BMW five-year-old, it is not easy to repair.
How to lower your car's depreciation rate
Unfortunately, car decline is inevitable. However, there are steps that can be taken to slow down the process.
1. Reduce your car's miles.
According to the United States Department of Transportation Federal Highway Administration that Americans drive about 13,500 miles per annum,6 that's more than 1,000 miles per month.
While we don’t expect everyone to ride to work every single day, think about all the calories you’ll burn. There are ways to reduce your driving distance. Reduce the number of trips you make each week by completing all your errands together. If you often take long, cross-country road trips, renting a vehicle is a better option. All those miles can add up!
2. Follow your car's maintenance program.
When it comes to car maintenance, it is the little things that really matter. Cars that are maintained well will retain their value. Regular maintenance can not only improve safety and performance but can also save you thousands of dollars on future repairs.
Check your car's owner's manual to see a detailed servicing schedule. This will allow you to know when to bring your car to the mechanic for regular maintenance.
Here are some additional maintenance tips. Our free Ramsey Car Guide has a whole chapter devoted to car maintenance.
3. Purchase reliable, gently-used cars
As we have mentioned, new automobiles lose their value much faster than older automobiles. Saving up is the best way to buy your car.
is a millionaire who drives a 4-year-old car with 41,000mi. When they buy used cars, they are letting someone else take the brunt of the car's rapid loss of value in its first year. The result is a reliable car that can be maintained properly for many years. Smart!
Car Insurance: Don't Forget It
New cars are more expensive to cover, and they also depreciate faster. It's possible to save as much as 12 percent on car insurance by buying a 5-year-old model instead of a brand-new one.
This is why we recommend that you work with one of our insurance Endorsed Local Producers (ELPs). You can rely on them to help you find the best insurance at the lowest price, regardless of whether you are in the market for a vehicle or plan to drive Old Faithful for many more years.
Article author
Parmis Kazemi
Parmis is a content creator who has a passion for writing and creating new things. She is also highly interested in tech and enjoys learning new things.
Car Depreciation Calculator English
Published: Mon Apr 11 2022
In category Financial calculators
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