In terms of vehicle appraisal, what does "depreciation" refer to?

Depreciation in vehicle appraisal specifically refers to the decrease in market value of a vehicle over time. This reduction in value can be attributed to various factors, including age, mileage, wear and tear, and market demand. In the context of appraisal, understanding depreciation is crucial for evaluating how much a vehicle is worth at a given moment compared to its original purchase price.

As vehicles age, their desirability and function may diminish due to advances in technology, changes in consumer preferences, and overall wear from usage, leading to an inevitable decline in market value. This concept is essential for appraisers who need to assess a vehicle's worth accurately, whether it's for insurance purposes, a sale, or trade-in evaluations.