Car Depreciation Formula Explained, With Examples
Every car depreciation result comes from one formula. Once you understand what goes into it, you can sanity-check any figure you are given, whether by an employer, a bank, a teacher or another website.
The formula
Depreciation = (price − rebates) ÷ remaining COE years.
What each input means
- Price you pay (S$): the value you enter in the calculator.
- PARF + COE rebate at end (S$): the value you enter in the calculator.
- Years of COE remaining: the value you enter in the calculator.
Example
For example, with these inputs:
- Price you pay (S$): 120,000
- PARF + COE rebate at end (S$): 15,000
- Years of COE remaining: 9.5
the calculator returns:
- Annual depreciation: S$11,052.63
- Monthly depreciation: S$921.05
How the result changes
The table keeps the other inputs at their example values and changes price you pay (s$).
| Price you pay (S$) | Annual depreciation | Monthly depreciation |
|---|---|---|
| 120,000 | S$11,052.63 | S$921.05 |
| 60,000 | S$4,736.84 | S$394.74 |
| 90,000 | S$7,894.74 | S$657.89 |
| 150,000 | S$14,210.53 | S$1,184.21 |
| 180,000 | S$17,368.42 | S$1,447.37 |
Why it matters
Interest rates, instalments and returns compound over years, so a small difference in rate or tenure turns into thousands of dollars. Working the numbers out yourself makes it easier to compare bank offers, avoid expensive debt and plan savings goals.
An emergency fund of three to six months of essential expenses protects you from having to borrow at high rates when something unexpected happens. Once that buffer is in place, extra savings can go towards longer-term goals and investments.
Inflation erodes buying power, so a savings goal set in today's dollars needs to be adjusted upwards for the years it will take to reach it. Singapore's core inflation has varied widely over the past decade, so it is worth testing a range of rates.
Cars in Singapore carry costs found almost nowhere else, including the Certificate of Entitlement and the Additional Registration Fee. Loans are capped at 60% or 70% of the price depending on the car's Open Market Value, and the maximum tenure is seven years.
Related calculations
- Profit Margin Calculator: Calculates profit, margin and markup from cost and price.
- Markup Calculator: Finds the selling price from cost and markup.
- Discount Calculator: Works out sale prices during Great Singapore Sale, 11.11 and other promotions.
- Split the Bill Calculator: Splits a bill evenly.
Use the Car Depreciation Calculator to plug in your own numbers.
Run your own numbers: Car Depreciation Calculator