Car Depreciation

Vehicles lose value every year, and this calculator models that loss as compound annual depreciation -- the same mechanism as compound interest, just working in reverse. Each year, the vehicle's current value (not its original purchase price) is reduced by the depreciation rate, so later years lose fewer absolute dollars than earlier years even at a constant percentage rate, because the base amount being depreciated keeps shrinking. The condition factor lets you adjust the effective depreciation rate up or down from that baseline: a factor below 1.0 represents a well-maintained, low-mileage vehicle depreciating more slowly than average, while a factor above 1.0 represents a higher-mileage or harder-used vehicle depreciating faster.

The calculator multiplies the annual depreciation percentage by the condition factor before compounding, so the two work together rather than independently -- a high base depreciation rate combined with a high condition factor compounds into a much faster overall value decline than either alone. Because depreciation compounds continuously with vehicle age (including fractional years, not just whole years), a car's estimated value can be computed for a mid-year age like 2.5 years just as reliably as for a clean whole-year age. This is a simplified model for rough estimation and comparison -- actual resale and trade-in values depend heavily on make, model, mileage, market conditions, and vehicle history beyond what a single depreciation rate can capture.