How to Calculate Car Values

by Matthew Fortuna

A car is an investment and it can be a gamble just like the stock market. Knowing the right time to get out and how much return you will get on your car is essential in making the procedure profitable, and that profit is usually helpful in the search for your next car. When calculating the value of a used car, most buyers and sellers go by the same formula, one that is based off of the trusted Kelley Blue Book resource. Though it depends on several factors, the value of your used car can be calculated fairly consistently using some short math equations.

Determine the salvage value of your used vehicle, which if often done by looking it up the value of the car in the Kelley Blue Book. The book can be purchased in most automotive stores, or found on-line (see Resources).

Multiply the Kelley amount by .15 to determine 15 percent of the salvage value.

Calculate the estimated useful life of your vehicle. Do this by subtracting the number of year's since the car was produced from the number eight. If you bought the car new four years ago, your estimated useful life will be four years. This number is based on the useful life guideline of eight years and 150,000 miles.

Divide the salvage value from Step One by the estimated useful life from Step Three.

Multiply your answer from Step Four by the number of years since the car was produced.

Subtract your answer from Step Five from the salvage car value from step one. The answer to this equation will be the current car value.

About the Author

Matthew Fortuna is a full-time freelance writer with a journalism degree from Wayne State University, living in the Detroit metropolitan area. He has written about a wide range of topics across varying publications, including Demand Studios, wiseGEEK.com and Suite101.com, among others. He holds a Bachelor of Arts in journalism from Wayne State University.