1. What Is Car Depreciation?

Car depreciation refers to the decrease in a vehicle's value over time. In Canada, cars typically lose 15-20% of their value in the first year and continue to depreciate annually, making it one of the largest costs of vehicle ownership.

2. How Does The Calculator Work?

The calculator uses the depreciation formula:

Where:

• \( Purchase\ Price \) — Original cost of the vehicle in Canadian dollars
• \( Depreciation\ Rate \) — Annual rate of value loss (expressed as decimal)
• \( Years \) — Number of years since purchase

Explanation: This formula calculates the compound depreciation of a vehicle over time, showing how much value it has lost each year.

3. Canadian Car Depreciation Rates

Details: In Canada, new cars typically depreciate 15-20% in the first year, 10-15% in the second year, and 5-10% annually thereafter. Luxury vehicles and certain brands may depreciate at different rates.

4. Using The Calculator

Tips: Enter the original purchase price in CAD, the annual depreciation rate as a decimal (e.g., 0.15 for 15%), and the number of years since purchase. All values must be valid (price > 0, rate between 0-1, years ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: Why do cars depreciate so quickly in Canada?
A: Harsh winter conditions, road salt, and high supply of used vehicles contribute to faster depreciation compared to some other countries.

Q2: Which cars hold their value best in Canada?
A: Toyota, Honda, and Subaru models typically have the best resale value in Canada due to their reliability and performance in winter conditions.

Q3: How does mileage affect depreciation?
A: Higher mileage accelerates depreciation. Canadian drivers average about 20,000 km per year, which is higher than many other countries.

Q4: Are electric vehicles depreciating differently?
A: EVs initially depreciate faster due to technology improvements, but this is changing as the market matures and battery technology stabilizes.

Q5: Can maintenance records affect resale value?
A: Yes, complete maintenance records can significantly improve resale value in the Canadian market, especially proof of rust protection and winter maintenance.