Vehicle EconomicsAnnual Depreciation Cost
Turn a known value decline into an annual, monthly, and per-mile ownership cost.
Why this comes up
You already know what your vehicle was worth and what it's worth now, or you've gotten two appraisals apart, and you want that translated into an ownership cost you can compare against fuel, insurance, and maintenance. Depreciation is usually the largest single cost of owning a vehicle, and most owners never actually put a dollar-per-year figure on it because nothing bills them for it directly.
How we calculated this
We take the difference between your starting and ending value and divide it evenly across the period you entered, in years. If you provide annual miles, we also divide the annual figure by that to get a cost per mile.
Worked example, using this page's own defaults ($28,000 to $20,500 over 24 months, 12,000 annual miles): the vehicle lost $7,500 in value, which comes to $3,750/year, or about 31 cents per mile. Run the calculator above to check your own numbers.
What this means
- A lower payment does not offset rapid depreciation, if you're comparing two vehicles on total ownership cost, depreciation this size can outweigh a meaningfully smaller monthly payment.
- This is a known-value calculation, not a forecast, use Car Depreciation Calculator if you want to project a future value from an assumed rate instead of two known appraisals.
- A rising figure over successive checks (rather than a steady one) usually means the vehicle is entering a steeper part of its depreciation curve, not a data error.
Limitations
This is an allocation of a known value difference, not a valuation service or a forecast of future value. See Methodology.
Methodology
This engine is built on Vehicle Economics' equity and depreciation projection model: your value and loan payoff projected forward from your own depreciation figure until they cross. See Methodology for the full detail.