Car Depreciation Calculator In India

Are you planning to purchase a new car or sell your old one? It is important to know how depreciation affects the car's value, what it would mean to you, and how it might impact your next car purchase? In this article, learn about what a car depreciation calculator is and how to use it.

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Car Depreciation 

Car depreciation is the difference in the value of a car between the time you purchase and when you sell it. In simple words, it is a decrease in the value of a car over time depending on several factors. Every car’s value depreciates with time due to natural wear and tear. The Insurance Regulatory and Development Authority of India (IRDAI) has laid the rate of depreciation of cars for calculation of IDV.

The below table gives an overview of the rate of depreciation in India, based on the age of the car. The car depreciation rate mentioned in the table below is for calculating the IDV of your car.

Age of Car

Rate of Depreciation

0-6 months


6 months – 1 year


1 year – 2 years


2 years – 3 years


3 years – 4 years


4 years – 5 years


Above 5 years (for obsolete models)

Mutually decided between insurer and vehicle owner

It is important to know that the car depreciation rate for particular car components varies. Check this list of car components with their rate of depreciation-

Car Components

Rate of Depreciation

For all rubber parts/nylon parts/plastic parts/ tyres and tubes/batteries and airbags




Fiberglass components


Glass components


car depreciation calculator

Factors Affecting Depreciation of a Car

Several factors affect the value of a vehicle over time, which are as follows-

  • Age of the Car: The physical condition and mileage of a car are to calculate its age. The older the car means; the lesser the value.
  • Fuel Efficiency: Fuel-efficient cars are cost-effective and have good resale value. 
  • Model of the Car: Large luxury cars have more depreciation rate than smaller cars. It is because they run more, and their parts/maintenance are usually more costly.
  • Maintenance: The more maintained a car is, the lower its depreciation value will be. If your vehicle has bodywork issues or a poor interior, you can expect a high depreciation charge.
  • Number of Owners: When it comes to calculating depreciation, the rule is- the fewer owners, the better.

Car Depreciation Calculator - Concept and Working

Depreciation is the difference between how much you pay to buy a vehicle and the amount you get back after selling it.

In India, many insurers provide an online tool on their website to calculate car depreciation. This car depreciation calculator will allow you to see the expected resale cost of your car for the next decade.

If you want to calculate the depreciation of your car, you can use two different types of formulas:

  • Prime Cost Method for Calculating Car Depreciation


          Cost of Running the Car x (Days you owned÷ 365) x (100% ÷ Effective life in years) = Lost Value

          Under this method, the calculation of depreciation is based on the fixed percentage of its cost.

  • Diminishing Value Method for Calculating Car Depreciation


           Value of the Car when Purchased x (Days you owned ÷ 365) x (200% ÷ Effective life in years)

           Under this method, the calculation is based on the base value of the car.  

4 Ways to Minimize Car Depreciation 

There are many ways you can use to minimize the depreciation and get higher IDV & resale value. Here are 04 tips you can follow to reduce the depreciation of your car:

  1. Maintenance of Your Car: There are chances that you will receive better resale value if your vehicle is in good shape. Do not forget the maintenance records of services. And try to avoid modifications in the vehicle as it makes a car more difficult to sell.
  2. Buy a High-Resale Car Model: Some cars hold their value better than others. Do deep research on resale values before you buy a new car. By this, you can avoid a car that has higher car depreciation.
  3. Buy Zero-Depreciation Cover: Buy the zero-depreciation add-on cover in your car insurance policy, as it repays you for the amount of claim that gets deducted due to the depreciation of your vehicle.


If you are looking to purchase a new car or planning to sell your existing one, take depreciation factors into account. With the help of a car depreciation calculator, you can estimate the expected resale value of your car. Always remember that depreciation slows down as the car gets older.

Written By: PolicyBazaar - Updated: 25 November 2021
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Note: This is your car’s recommended IDV as per IRDAI’s depreciation guidelines.asdfsad However, insurance companies allow you to modify this IDV within a certain range (this range varies from insurer to insurer). Higher the IDV, higher the premium you pay.

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