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.

Read more



Stay home & renew car insurance in 2 minutes

No documents required
Processing
Get Car Insurance starting
@ only 2072/year*
  • Save up to 80%* Lowest Car Premiums

  • 20+ Insurers To Choose From

  • 25 Lakh+ Vehicles Insured

*TP price for less than 1000 CC cars. All savings are provided by insurers as per IRDAI approved insurance plan. Standard T&C apply.

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

5%

6 months – 1 year

15%

1 year – 2 years

20%

2 years – 3 years

30%

3 years – 4 years

40%

4 years – 5 years

50%

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

50%

Paintwork

50%

Fiberglass components

30%

Glass components

Nil

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

           Formula

          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

           Formula

           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.

Conclusion

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
You May Also Like
  • Transferring Car Insurance from One Person to Another

    Transferring Car Insurance from One Person to Another In the current economic climate that encourages consumers to “reduce, reuse and recycle”, it is becoming increasingly common for people to purchase second-hand...

    read more
  • 9 Secrets That Your Motor Insurance Provider Won’t Tell You

    9 Secrets That Your Motor Insurance Provider Won’t Tell You Due to the dangerous driving conditions, it is compulsory to have third party insurance for every vehicle plying on Indian roads. It ensures the overall saf...

    read more
  • Money Saving Advice for All Car Owners

    Money Saving Advice for All Car Owners After a dream home, a dream car is your second-largest purchase that you make in your lifetime. But the expense does not cease when you drive off the car dealer's lot. Read mor...

    read more
  • Difference Between Comprehensive Insurance and Third Party Insurance

    Difference Between Comprehensive Insurance and Third Party Insurance Comprehensive insurance is insurance coverage that pays for the repair or replacement of vehicle damages resulting from an incident. Comprehensive ca...

    read more
  • Types of Motor Insurance

    Types of Motor Insurance The word Motor broadly covers a lot of classes of vehicles plying on the roads. These may be two-wheelers like scooters and motorbikes, three-wheelers or four wheelers like private cars, jeeps, ...

    read more
Search
Car insurance save up to 80
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Calculate your car IDV
IDV of your vehicle
Calculate IDV
Calculate Again

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.

Policybazaar lets you compare premium prices from 20+ Insurers!
Compare Prices
Car Insurance Renewal

Car insurance articles

Recent Articles
Popular Articles
Is Cashless Car Insurance Beneficial for Car Owners in India?

24 Nov 2021

With the advancement in technology, car insurers have also evolved...
Read more
Things to Know About Total Loss Car Insurance Claim Process

22 Nov 2021

Imagine you have raised a claim after your car gets damaged in an...
Read more
Documents Required for Car Insurance Renewal in India

19 Nov 2021

Driving on public roads poses a threat to the driver's life and...
Read more
Why Should You Buy a Long-Term Car Insurance Policy?

18 Nov 2021

Imagine what will happen if you don't have car insurance and meet...
Read more
Does Scrapping Your Car Impacts Insurance Policy?

16 Nov 2021

Old cars with poor engine efficiency lead to air pollution. With...
Read more
Getting Your Duplicate Car Insurance Policy is Easy-Here’s How!
Insurance offers much-needed financial protection in case of a crisis. When vehicle insurance is mandatory in India...
Read more
Transferring Car Insurance from One Person to Another
In the current economic climate that encourages consumers to “reduce, reuse and recycle”, it is becoming...
Read more
How to Check Car Insurance Status Online on Parivahan Sewa/ RTO?
In India, buying car insurance is a compulsion for every car owner. It doesn’t matter if you are an excellent...
Read more
Multiple Ways To Check Your Car Insurance Status Online
Keeping a check on your car insurance policy is as important as purchasing a comprehensive insurance policy for...
Read more
Difference Between Comprehensive Insurance and Third Party Insurance
Difference Between Comprehensive Insurance and Third Party Insurance Comprehensive insurance is insurance coverage...
Read more