Depreciation.
In plain English
Depreciation is the decline in something's value as it gets older or wears down. A new car is the classic example: it can lose a large share of its value in the first few years simply from being driven and aging. Depreciation also applies to equipment, electronics, and buildings. For a buyer it is a real cost even though no cash leaves your pocket month to month, because the asset you own is quietly worth less. In business and taxes, depreciation is also a formal deduction that spreads an asset's cost over its useful life.
01Why it matters
Depreciation is often the single biggest cost of owning a car, larger than fuel or repairs, and understanding it changes how you think about buying new versus used.
02The math, step by step
You buy a new car for 35,000 dollars. After three years it may be worth around 21,000 dollars. That 14,000 dollar drop is depreciation, a cost you paid without ever writing a check for it.
03What this is NOT
Depreciation is NOT a bill you pay each month. It is the value your asset silently loses over time, which is why it is easy to ignore even though it is often the largest cost of ownership.