How to Depreciate a Used Vehicle

A vehicle loses 15 percent to 20 percent of its value every year. If you plan to drive a car until it no longer works, this doesn't pose a problem. If you plan to sell or trade the car sometime in the future, you need to calculate depreciation. Depreciation is the amount an asset decreases in value each year. For vehicles, depreciation begins the moment you take ownership and lasts until the end of the car's useful life.

Instructions

1

Determine the useful life of the car, which is five years for a business vehicle and eight years for a personal vehicle.

2

Divide the purchase price of the vehicle -- minus sales tax, delivery fees and discounts -- by the useful life. A $17,000 vehicle with a useful life of eight years depreciates by $2,125 every year.

3

Multiply the depreciation by number of years you've used the car. If you've had the car for three years, the car has depreciated $6,375, resulting in a current value of $10,625.

4

Subtract the depreciation from the current value each year until you reach the end of the vehicle's useful life.