Car Depreciation Calculator in UAE

Car depreciation is simply the difference between the purchase price and the resale price of a car. It is among the biggest expenses for vehicle owners along with fuel and maintenance. ...read more

UAE Motor Insurance
Instant

Issuance

Auto Insurance Dubai
Personalised

Expert advice

Motor Insurance in Dubai
Guaranteed

Low prices

Car Insurance in Dubaicar image dark
next-icon
Compare & Save up to 30% on Car Insurance
Search Your Car's brand
Nissan
Toyota
Honda
Mitsubishi
Ford
Hyundai
We Are Rated

4.6/5

24,645

google-logoReviews
50+

Insurance Partners

1 Million+

Trusted Customers

250 K+

Policies Sold

When you invest in an asset like a car, it's essential to grasp the concept of depreciation. Depreciation is simply the decline in value that occurs over time as you use or own the asset. This principle applies universally to fixed assets, including vehicles. While you may not be able to do much about the depreciation process entirely, having a solid understanding of how to calculate depreciation of a car can help you make informed decisions

What is Car Depreciation?

Depreciation is simply the reduction in the value of an asset over time when you use it or own it. This applies to all kinds of fixed assets which also includes cars. Car depreciation is also referred to as used car valuation, which is what car depreciation calculators estimate. The general rate of depreciation is decided by government authorities, but it can be influenced by individual factors related to the car as well. The general rates are applicable on the basis of time. Apart from that, factors like the physical condition of the car, functionality and drivability can further influence the rate of depreciation applicable to your car. The federal authorities of the UAE determine the depreciation rate that applies to an asset including the car.

  • Comprehensive
  • Third Party
*Above mentioned prices are for Honda City EX 1.5L, 2017 model.
*Above mentioned prices are for Honda City EX 1.5L, 2017 model.

New cars depreciate faster than used cars, usually losing up to 60% of their value in the first 3 years. Understanding car depreciation is important before buying a vehicle, as the depreciated value is what you will get when you sell the car.

The accelerated depreciation method of calculation is the most common way to determine the baseline depreciation of cars and other fixed assets. This way, the depreciation for the first year after the car hits the road becomes equal to the straight-line method while the upcoming one increases for the first few years. The resulting percentage can be later influenced by other factors related to your car.

Car Depreciation Calculator – How Does It Work?

To simplify the process of estimating your car's depreciation, you can turn to online car depreciation calculators. Auto depreciation calculators use various factors such as the car's make and model, purchase price, age, and mileage, to provide an estimate of its current value.  All you need is the initial value of the car when you purchased it and the amount of time for which you have owned it. The time can be in years rather than days here. Simply enter these values in their assigned places to calculate vehicle depreciation, i.e., the value of the car after depreciation. Note that some more comprehensive vehicle depreciation calculators even offer additional value calculations for several timelines rather than just one. 

Car Depreciation Calculation Formula - 

Automobile depreciation calculators use either of these two formulas to calculate car depreciation — 

  1. Cost of running the car x (days for which you have owned the car/365) x (100%/Years of Effective Life) = Lost Value of the Car
  2. The true value of the car when purchased x (days owned/365) x (Years of Effective Life/200%)

While car depreciation calculators can offer a helpful starting point, it's essential to consider additional factors specific to your car's condition and market trends.

Current Car Depreciation Rates in the UAE

Take a closer look at the estimated standard car value reduction rate —

Year Car Depreciation Rate
1st year 0%
2nd year 5%
3rd year 10%
4th year 15%
5th year 20%
6th year and above 30%

Car Value Deduction Rate for Taxis, Rentals, and Public Transport

For rentals, taxis, and public transport, the vehicle depreciation rates in UAE are —

Year Car Depreciation Rate
Second half of the 1st year 10%
2nd year 20%
3rd year 25%
4th year 30%
5th year 35%
6th year and above 40%

Brands with Slow Car Value Depreciation Rates and Higher Resale Value in the UAE

As per a survey of the motor market in the UAE, you can find 5 cars with higher resale value —

The UAE is rapidly becoming a significant used car market. As per reports, the value of used cars increased from 4 to 10 %in the last year. Moreover, used cars are now selling faster and at a more expensive price than before.

This leads to an expert prediction that used cars may depreciate slower in value than new cars and also fetch more during resale.

Compare your car Insurane

How Can Depreciation Influence Car Insurance Plans?

Depreciation plays a crucial role in determining the insured declared value (IDV) of your car — this, in turn, directly affects car insurance coverage and premiums. 

A lower IDV due to depreciation can result in reduced coverage but may also lead to lower premiums.

For example, if your car retains as much as a 50% decline in its value, your insurance plan will also see a similar decline in the assured sum. At the same time, a lower IDV due to the depreciated value of your car means that you will have to pay lower premiums for the car insurance plan

If that’s something you are looking for, depreciation can actually come in handy. But the result is the same — depreciation will make you lose most of the resale value of the car, which can be problematic if you plan to sell the car when it gets totalled and get a new one. 

Car Insurance Add-ons
Personal Accident Cover Roadside Assistance
Engine Protection Cover IDV-Insured Declared Value
No Claim Bonus Passenger Cover

How Can You Minimise Car Depreciation?

Having understood how car depreciation calculators work and the associated factors, let’s see what you can do to minimise your vehicle depreciation rate in UAE -

  1. Maintain Your Car: Regular maintenance and keeping the car in good condition can minimise depreciation. Avoid excessive modifications as they can also lower the car's value.
  2. Consider No Depreciation Cover: Add-ons like no-depreciation cover can protect your car's value, ensuring that you receive compensation based on the original purchase price in case of total loss.
  3. Choose High Resale Value Models: Look for car models with high resale value and consider investing in one to mitigate depreciation losses.
  4. Limit Usage: Reducing unnecessary usage can slow down depreciation, particularly for luxury vehicles.
  5. Opt for High-Mileage Vehicles: Diesel cars with better fuel efficiency may experience slower depreciation, making them a wise choice for some buyers.

avoid your fine

Factors That Can Affect Car Depreciation

The vehicle depreciation rate in UAE is influenced by various factors, each playing a significant role in determining how much your vehicle is worth over time. While you can always use a car depreciation calculator to check values, it’s also important to understand the impact of each factor.

Here are the factors that affect the car depreciation rate in UAE —

  • Car Condition: The condition of the car plays an important role in determining the resale value of your car (or if you want to trade in your next vehicle). If your car has been through proper servicing at the required time and has not met any accident, you can maintain good car value. However, if the condition is the opposite, the car depreciation rate increases.To avoid faster depreciation, it’s important to protect the vehicle from excessive wear and tear. 
  • Car’s Make, Model, and Body Type: Cars with higher demand in the used car market generally have a higher resale value.Some car models retain value better than others. For example, Japanese cars often depreciate slower due to high demand. Choose a car make and model that is consistently in demand to resell at a better price.
  • Mileage: Cars with higher mileage or the distance covered depreciate faster. To upkeep resale value, don’t overuse the car. You can, for instance, hop onto public transport for longer journeys.
  • Age: Vehicle age is crucial for the car value reduction rate. Cars lose about 20-25% value in the first few years and 15-20% in subsequent years. Buying a slightly used car or upgrading after 3-5 years can slow depreciation.
  • Service History: Well-maintained cars with a complete service history have a higher resale value. Keep all service receipts as cars without a service history have a higher depreciation rate in UAE.
  • Visual Condition: The exterior and interior conditions matter significantly. Park your car in garages or cover it to protect it from the UAE's hot weather. Keep your car clean inside and out to maintain its value.
  • Renewed Car Insurance: Cars with expired insurance depreciate faster and have a lower resale value. 

In a Nutshell

Car depreciation can be confusing if you are a first-time owner with a limited understanding of car depreciation. However, finding out the estimated cost of your car is nothing but easy with easy-to-use car depreciation calculators. However, take note that the actual depreciation applied to the vehicle may differ slightly as per the individual factors that may have an effect on it. Make sure that you take every factor into account when estimating the depreciation that is applicable to your car using a vehicle depreciation calculator. Take a bit of assistance from our experts if you feel the need so that depreciation is calculated correctly.

Important Articles Related Car Insurance

Top Car Insurance In UAE How To Check Car Insurance Status
COVID-19! Buy & Renew Car Insurance Online! Transfer Car Insurance from One Person to Another
Temporary Car Insurance Car Insurance Policy Lapsed or Expired
Laws You Should Be Familiar with Before You Sell Your Car in The UAE Are you Aware of the Black Points on Driving License in Dubai?
Driving Codes that Driver of the UAE Must Follow A Brief Guide to Car Insurance in the UAE
How Insurer Car Value Affects Your Insurance Premium Everything you Need to know About Replacement Car Cover
Meeting an Accident When You Don’t Have a Car Insurance When Should You Change Your Car Insurance Company?

Reviews & Ratings

4.6 / 5
(based on 24,645 reviews)

More From Car Insurance

  • Recent Articles