Vehicle depreciation.

In plain English

Vehicle depreciation is the drop in a car's market value as it ages and racks up miles. It is steepest early on, with a new car often losing a large share of its value in the first year and the most over the first few years. Depreciation is a real cost even though you never write a check for it, because you get less back when you sell or trade in. Cars with strong reliability and demand hold value better, which is why some models depreciate far slower than others.

01Why it matters

Depreciation is often the single largest expense of car ownership, larger than fuel or repairs, and buying a slightly used car lets someone else absorb the worst of it.

02The math, step by step

You buy a new car for 30,000 dollars. Retention rates vary widely by model, but suppose this one holds about 55 percent of its value after three years. That is 16,500 dollars, meaning roughly 13,500 dollars vanished into depreciation, likely more than you spent on gas in that time. Over 30 years of always buying new, that pattern repeating can quietly cost six figures versus buying lightly used.

03What this is NOT