Depreciation Value

When you drive a new car off the car lot, it begins to depreciate. Depreciation refers to the wear and tear that a car undergoes, even if it is minimal. In fact, every mile that you drive your car leads to some form of depreciation. Depreciation lowers the value of the car.

When you are leasing a car, the depreciation of the car is taken into account when calculating the lease terms. The total depreciation is found by subtracting the value of the car at the end of a certain period of time from the capitalized cost when the car was first purchased or leased.

Cars are assets that tend to depreciate quickly. Because the natural use of a car causes wear on the engine and other moving parts, there is very little a car owner can do to stop depreciation. However, maintaining your car well through oil changes and other maintenance can slow down the depreciation rate on your car.

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