How Do You Factor Depreciation Into A New Car Purchase?
Factoring the depreciation of a new car can be very important in determining the value of the vehicle overall. While depreciation is not the same as resale value, it can be more important because it expresses the amount that it costs to own the vehicle for a long period of time. There is a formula to depreciation: SL= C/L, or Straight Line = Cost/Life. There are other types of depreciation calculations, but this is the easiest. Write this formula down. Fill in the variables. Cost should equal the initial cost of the vehicle, excluding taxes and other fees. Life should be the expected ownership time. You should be reasonable with this number. Divide the initial cost of the vehicle by the life expectancy of the vehicle. This will give a depreciation amount. Subtract the depreciation amount from the cost of the vehicle for the actual value of the vehicle at the end of the first year. Take this number and subtract the same amount to find the actual value of the vehicle at the end of the se
