Calculator: Car Depreciation

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Vehicle Depreciation Calculator

Depreciation of a car is the process of accounting for its decrease in value over time due to wear and tear and obsolescence. Calculating depreciation allows you to determine how the value of your car will change from the moment of purchase. This is a useful tool for determining the best time to sell or replace a car, as well as for accounting for taxes and other economic aspects of owning a car.

Below is a depreciation calculator that will help you calculate the change in the residual value of your car, taking depreciation into account. You simply need to specify the date and cost of purchase, as well as the period during which you plan to use your car. The calculator will help you determine the best depreciation method and track how the value of your car changes over time.

If you wish to consistently monitor the Total Cost of Ownership (TCO) for your car, consider installing our ARBA Auto app. This app uses the most precise methods - the Market Value and Straight Line approaches - to deliver accurate tracking of your car's ownership costs.

Vehicle depreciation chart

Description of depreciation calculation methods

Straight Line Method

This method is based on the even distribution of the car's cost throughout its service life. The depreciation amount each month will be the same, and the car's value will gradually decrease to a specified residual value.

Accelerated Method

In this method, depreciation occurs faster at the beginning of the car's service life and slows down over time. The depreciation amount each month will decrease, and the car's value will approach the specified residual value.

Market Value Method

This method takes into account the car's current market value. The depreciation amount is calculated based on the difference between the initial cost of the car and its market value, divided by the number of months since the purchase.

How to use the calculator:

  • Enter the car's purchase date in the "Purchase Date" field.
  • Enter the initial cost of the car in the "Purchase Cost" field.
  • Enter the car's depreciation term in years in the "Depreciation Term Years" field.
  • Enter the current market value of the car in the "Current Market Value" field, if available.
  • Enter the date you want to calculate the depreciation for in the "Current Date" field.
  • Optionally: Enter the residual value of the car that you want to consider in the calculations in the "Residual Value" field.

After entering the data into the calculator and clicking the "Calculate Depreciation" button, the calculator will generate a table and a chart displaying the residual value of the car depending on the selected depreciation calculation method.

The table will contain columns for each of the three depreciation methods: straight line, accelerated, and market value. Each row in the table will indicate the month and corresponding residual value of the car for each method.

The chart will show the change in the car's residual value over months for each of the three depreciation methods. This will allow you to visually compare the calculation results and choose the method that best suits your needs.

Using this calculator, you can get an accurate assessment of your car's residual value at any chosen moment in time and make informed decisions about selling, buying, or using a car.

You can learn more about the concept of depreciation in this Wikipedia article in greater detail.