Car Depreciation By Mileage Calculator

Depreciation Formula:

\[ Dep = \frac{miles}{expected\ miles} \times (purchase - salvage) \]

Miles:

miles

Expected Miles:

miles

Purchase:

Salvage:

Dep:

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1. What is Car Depreciation By Mileage?

Car depreciation by mileage is a method to calculate the decrease in a vehicle's value based on the miles it has been driven. This calculation helps determine how much value a car has lost due to usage over time.

2. How Does the Calculator Work?

The calculator uses the depreciation formula:

\[ Dep = \frac{miles}{expected\ miles} \times (purchase - salvage) \]

Where:

\( miles \) — Actual miles driven
\( expected\ miles \) — Expected total miles over vehicle's lifespan
\( purchase \) — Original purchase price
\( salvage \) — Estimated salvage value at end of life

Explanation: The formula calculates depreciation proportionally based on how much of the vehicle's expected lifespan has been used.

3. Importance of Depreciation Calculation

Details: Calculating depreciation by mileage is important for insurance purposes, resale value estimation, tax calculations, and financial planning for vehicle replacement.

4. Using the Calculator

Tips: Enter actual miles driven, expected total miles, original purchase price, and estimated salvage value. All values must be positive numbers with salvage value less than or equal to purchase price.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical expected mileage for a vehicle?
A: Most modern vehicles are expected to last between 150,000-200,000 miles, though this varies by make, model, and maintenance history.

Q2: How does this differ from straight-line depreciation?
A: Mileage-based depreciation accounts for actual usage rather than just time, providing a more accurate representation of value loss for vehicles.

Q3: What factors affect salvage value?
A: Salvage value depends on the vehicle's age, condition, make/model popularity, and current market prices for parts and scrap metal.

Q4: Should maintenance costs be considered?
A: While this calculator focuses on mileage-based depreciation, maintenance history significantly impacts a vehicle's actual resale value.

Q5: Is this method accepted for tax purposes?
A: For business use, consult a tax professional as different depreciation methods may be required for tax reporting.