Enter the initial car value, time the car has been owned, and the current car value into the car depreciation calculator. The calculator will display the average depreciation per year the car has undergone.

Car Depreciation Formula

The following formula is used to calculate the average percent yearly depreciation of a car.

D = [(IV – CV) / N]/IV*100
  • Where D is the % deprecation per year
  • IV is the initial value
  • CV is the current value
  • N is the number of years owned

Car Depreciation Definition

Car depreciation refers to the decrease in value that occurs over time for a vehicle. It is a natural and unavoidable part of car ownership. The rate of depreciation varies depending on several factors, such as the make and model of the car, its age, mileage, condition, and the overall demand for that particular vehicle in the market.

New cars typically experience their highest depreciation within the first few years of ownership, with an average of around 20% to 30% depreciation in the first year alone. After that, the rate of depreciation tends to slow down. However, it is important to note that luxury cars and certain high-end models may experience even higher rates of depreciation.

Car depreciation has financial implications for car owners. When selling or trading in a car, the owner will likely receive less money than what they initially paid for the vehicle. This depreciation needs to be factored in when considering the overall cost of owning a car.

To mitigate the impact of depreciation, car owners can take certain measures, such as regular maintenance and repairs to keep the vehicle in good condition, avoiding excessive mileage, and choosing a car model that is known for holding its value well in the market. Additionally, purchasing used cars instead of new ones can also help minimize depreciation costs.

How to calculate car depreciation?

How to calculate the depreciation on a car

  1. First, determine the initial value of the car

    This will be the purchase price of the car or the market price of the car at the time of purchase.

  2. Next, determine the current value of the car

    Using a website like the kelly blue book, or an appraiser, determine the current value of the car.

  3. Calculate the depreciation

    Using the values from steps 1 and 2, as well as the total years owned, enter the information into the formula or calculator to determine the average depreciation per year.


What is a car depreciation?

Depreciation is a term used in finance to describe the decreasing value of an asset due to wear and usage. For example, as cars age, they become less reliable and therefore less desirable. This leads to a decrease in cost.

How can i lower depreciation on my car?

Through proper maintenance, any asset can hold its value better than without any work at all.

Why do car depreciate?

Cars depreciate because over time they become less reliable and start to break down. No one wants a car that's going to break down, which drives down the value.

Car Depreciation Calculator
car depreciation formula