function calculateDepreciation() {
var price = parseFloat(document.getElementById("purchasePrice").value);
var years = parseFloat(document.getElementById("carAge").value);
var rate = parseFloat(document.getElementById("depreciationRate").value) / 100;
if (isNaN(price) || isNaN(years) || price <= 0 || years < 0) {
alert("Please enter valid numbers for price and age.");
return;
}
// Formula: Value = Price * (1 – rate)^years
var currentValue = price * Math.pow((1 – rate), years);
var totalLoss = price – currentValue;
var retainedPercent = (currentValue / price) * 100;
document.getElementById("resCurrentValue").innerText = "$" + currentValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resTotalLoss").innerText = "$" + totalLoss.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resRetained").innerText = retainedPercent.toFixed(1) + "%";
document.getElementById("depreciationResult").style.display = "block";
}
Understanding Car Depreciation: How Much Is Your Vehicle Really Worth?
Buying a car is one of the most significant investments most people make, yet unlike a home, a vehicle is a depreciating asset. From the moment you drive a new car off the dealership lot, its market value begins to drop. Understanding the rate at which this happens is crucial for financial planning, insurance purposes, and determining the best time to sell or trade in your vehicle.
What is Car Depreciation?
Car depreciation is the difference between the amount you paid for your vehicle and its current market value. Most new cars lose roughly 20% of their value in the first year alone. Over the next four to five years, you can expect the car to lose approximately 15% of its remaining value annually.
Key Factors That Influence Depreciation Rates
Brand Reputation: Brands known for reliability, such as Toyota or Honda, typically hold their value longer than luxury brands with high maintenance costs.
Mileage: The more miles on the odometer, the lower the value. High mileage suggests more wear and tear on engine components.
Condition: Both mechanical health and cosmetic appearance play a huge role. Accidents on a vehicle history report significantly increase depreciation.
Fuel Efficiency: As gas prices fluctuate, fuel-efficient cars or hybrids often retain more value compared to "gas-guzzlers."
A Realistic Calculation Example
Let's say you purchase a mid-sized SUV for $40,000. If the vehicle has an average depreciation rate of 15% per year, here is how the value drops over time:
Year 1: $34,000 (Initial 15% drop)
Year 3: $24,565
Year 5: $17,748
By using our calculator above, you can input your specific purchase price and estimated depreciation rate to see where your vehicle stands today or what it might be worth in three years.
How to Minimize Your Vehicle's Value Loss
While you cannot stop depreciation entirely, you can slow it down. Keeping meticulous service records is the best way to prove to a future buyer that the car was well-maintained. Additionally, keeping the mileage below the national average (approximately 12,000 to 15,000 miles per year) and storing the car in a garage to protect the paint can help retain thousands of dollars in resale value.