Car Depreciation Calculator

Formula

To calculate the average percent yearly depreciation:

\[ D = \frac{\left(\frac{\text{IV} - \text{CV}}{\text{N}}\right)}{\text{IV}} \times 100 \]

Where:

$D$ is the Average Percent Yearly Depreciation
$\text{IV}$ is the Initial Value
$\text{CV}$ is the Current Value
$\text{N}$ 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.

Example Calculation 1

Let's assume the following values:

Initial Value (IV) = $30,000
Current Value (CV) = $20,000
Number of Years Owned (N) = 5

Using the formula:

\[ D = \frac{\left(\frac{30{,}000 - 20{,}000}{5}\right)}{30{,}000} \times 100 = \frac{10{,}000 / 5}{30{,}000} \times 100 = \frac{2{,}000}{30{,}000} \times 100 = 6.67\% \]

The average percent yearly depreciation is 6.67%.

Example Calculation 2

Let's assume the following values:

Initial Value (IV) = $40,000
Current Value (CV) = $25,000
Number of Years Owned (N) = 3

Using the formula:

\[ D = \frac{\left(\frac{40{,}000 - 25{,}000}{3}\right)}{40{,}000} \times 100 = \frac{15{,}000 / 3}{40{,}000} \times 100 = \frac{5{,}000}{40{,}000} \times 100 = 12.50\% \]

The average percent yearly depreciation is 12.50%.