Guessing approximate depreciation in coming year(s).

Oct 24, 2005 1 Replies
M

I guess this is something that a lot of us would be interested in, but I can't seem to find any way of figuring out how to go about this.



I have a 85K miles, 6 year old BMW 2000 323i 4dr sedan . From the dealer price 2 years back (24500) to its current KBB value (15500), it has depreciated $9000.



I am in a situation where I just *need* to figure out the monthly depreciation of this car for the next 1 or 2 years. Is there any way of finding this out? Assuming excellent condition and 15K per year mileage.



Surely, the rate won't be 4500/year cause that way in 3.5 years this car would be at $0 !? Logically, the depreciation rate should fall every year (highest in the 1st year, and gradually decreasing every year after that). Is this assumption correct?



Is KBB/Edmunds etc based on statistical data on local sale prices? Or is there a way to approximately predict the value after a year or two.



Any information will be highly appreciated!



Thanks



Vote
Twitter Facebook LinkedIn
J

It would seem that the declining balance method of depreciation would be the most appropriate. Looking at KBB values across 4 years centered on 2000 it looks like your car will depreciate about 20% per year for the next couple of years. So if the current value is $15500, then the depreciation for the next year will be $3100 or about $250 per month. This leaves the residual value at $12400 for the next year and then the depreciation would be $2480 or about $200 per month and be worth about $10000 after two years. You can get a more accurate figure by plugging the appropriate mileage, condition, and options information into KBB.

Vote
Twitter Facebook LinkedIn

Join the Discussion

Have something to add? Share your thoughts — no account required.

Didn't find your answer?

Ask the community — no account required