October 3, 2023

A car depreciation calculator is a handy tool that helps estimate a car’s value after being used for a given amount of time. You can always use this calculator to determine how much your vehicle is currently worth or verify whether the price you were offered for your used car was fair or not.

What Is Car Depreciation?

In simple terms, car depreciation is the decrease in the value of your car. It is the value that reduces once you’ve bought a car and is no longer brand new. For example, if you buy a new car today for $30,000, after a few years, this car won’t be worth the same money it was the day you purchased it.

You will probably agree that selling this car for $30,000 won’t be fair to the buyer. This is the concept of depreciation, where your vehicle loses its value in money once you purchase it and start using it. Some of the main reasons for car depreciation include aging car design, mileage, and wear and tear.

How to Reduce Your Car’s Rate of Depreciation

Unfortunately, you can’t stop car depreciation from happening, but there are a few things you can do to slow it down.

  • Keep your car’s mileage as low as possible, or make sure you’re driving more on highways than on short trips.
  • Ensure that you follow your car’s maintenance schedule to the latter.
  • Purchase reliable and fairly used cars.
  • Always drive safely.
  • Avoid all nonstandard modifications.

How to Calculate Depreciation

The formula for calculating vehicle depreciation is fairly simple. Just subtract your car’s present fair market value from the purchase price (sales tax and fees not included).

Which Cars Depreciate the Most?

While all cars lose value with time, some car models hold their value much better than others. Recent studies have shown that luxury sedans and electric vehicles tend to lose their value much faster, while jeeps and pickup trucks depreciate the least in the same amount of time.

Some of the car models that depreciate the most include Nissan Leaf, Chevrolet Volt, BMW 7 Series, Mercedes-Benz S-Class, and Ford Fusion Energi.

Which Cars Depreciate the Least?

Some of the car models that depreciate the least include Jeep Wrangler/Unlimited, Toyota Tacoma, Toyota Tundra, Nissan Frontier, and Toyota 4Runner.

How Much Does a Car Depreciate After an Accident?

How much your car will depreciate after an accident will depend entirely on the amount of damage sustained. For example, if your car sustains superficial body damage in an accident, the depreciation will be much less than that of a totaled car.

How Much Does a Car Depreciate Per Year?

Studies show that cars usually depreciate the most after the first year of ownership. After the first 12 months, your vehicle is likely to be worth 20% less than the amount you purchased it for. This depreciation rate may increase to 31% in the second year and 42% in the third year.

Do Hybrid Cars Depreciate Faster?

No. Hybrid cars usually depreciate at a slower rate compared to gas-fueled cars. If you’re looking for a car that will hold its value for longer, consider purchasing a hybrid one.

How Fast Does the Car Value Decrease?

Generally, several factors go into car depreciation. However, one of the most common aspects you’re likely to note is that new cars tend to depreciate at a higher rate than used ones. A new car is expected to lose about 9-11% of its value the minute you drive off the dealership.

Summing Up

Even though cars are a big investment and tend to depreciate a lot, they’re also necessities we can’t do without. For this reason, it’s best to maintain your car well and do everything you can to reduce its rate of depreciation, especially if you’re planning on reselling it.

Whether you’re trying to find out how much your old car can fetch on the current market, or you’re trying to determine if a new car you’re buying will depreciate at a slower rate, New Roads Auto Loans can help you finance your new car with zero money down lending. Get pre-approved in as little as 30 seconds, no matter your credit score or bankruptcy status.