Quote:
Originally Posted by bplewis24
How do you determine or estimate depreciation yourself? Do you use a schedule?
...The one thing I can't get a good hold on is how to determine car depreciation. It's nothing like fixed assets, building improvements and other things. Any ideas?
|
Just estimate. If it's a lease, it's easy. Difference between "cap cost" and "lease buyout at end." In fact, for any new car, use the lease analysis even if you're paying cash.
For a used purchase, you've gotta guestimate what you could sell the car for at the end of your planned holding period.
I just bought a 08 335i with 32k miles for $22k. Maybe I can get $10k for it in five years (I'm a low-mileage driver). That gives me a $12k capital cost over 60 months, or $200 per month. That, by my way of thinking, is the core cost of owning my car.
My actual ownership cost is more, of course (sales tax, maintenance, etc.). But the capital cost is the most important starting point.