Know your car’s value today by knowing how much value the car has lost since you bought it. Each year, the value depreciates. Calculate the book value by reducing the purchase price by the depreciation that occurred during the time you owned your car.
It does not take much to count up the dollars and cents. Put a pen or a pencil and paper on the desk and find the car purchase price. All you need then is depreciation rates.
Steps
1. Enter the purchase price in your valuation sheet. This number is your most important number.
2. Enter the depreciation rates. In accumulated deprecation, your car loses value quickly the first few years and then loses value slower during the following years. Make a table that lists the depreciation values for each year you owned the car.
3. In the order of the periods with different depreciation rates, calculate the depreciated value. The general formula is the depreciated value at the end of the period equals (1-d/100)^t times FV, where d is the depreciation rate for the period, t the number of years in the period and FV the first value for your car in the period.
For the first period, FV equals the purchase price. In subsequent periods, use the value at the end of the previous period
4. Record the depreciated value from the final period as your car’s book value.
5. Check the value with the estimates in the Kelley Blue Book. You can look up the car’s value by model and year in the book. If you prefer an online estimate, visit their Internet site at http://www.kbb.com.
Sources:
Car Depreciation at Premier Auto Financing
Calculating Depreciation at moneyinstructor.com
Used Car Values at Kelley Blue Book