Car Depreciation
The loss of a car's value over time — the difference between what you pay for it and what it is worth later. Usually the largest cost of owning a car, even though you never pay it as a bill.
A car starts losing value on the day it is bought. The drop is steepest in the first years and slows down later; how fast it goes depends on the make and model, mileage, condition, equipment and demand for the fuel type. Because depreciation is not a payment, it is easy to overlook — it only becomes real when you sell or trade in the car, but it is part of what the car has cost you. In business accounting, spreading an asset's price over its useful life is also called depreciation and follows tax rules; for a private car it means the economic loss of value, not a tax deduction. Assetli estimates a vehicle's current value with a linear or a two-phase model, shows the loss on the Value tab of the vehicle detail and includes it in the total cost of ownership comparison on the What If tab.
Example
A car bought for $30,000 sells for $18,000 three years later: depreciation is $12,000 (40%), on average $4,000 a year — a cost that never appeared on a bank statement.
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Related terms
Total Cost of Ownership (TCO)
Everything an asset costs you over the whole time you own it — not just the price or the monthly payment. For a car: depreciation, fuel, insurance, servicing, tyres, fees and interest.
Net Worth
The total value of all your assets (cash, investments, property) minus all liabilities (loans, mortgages, credit card debt).
Sinking Fund
Money set aside gradually for a specific, planned future expense, so it does not blow your budget.
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50/30/20 Rule
A budgeting guideline that allocates 50% of after-tax income to needs, 30% to wants, and 20% to savings and debt repayment.
Envelope Method
A cash-based budgeting system where money is divided into physical or virtual envelopes, each assigned to a specific spending category.
Zero-Based Budgeting
A budgeting method where every dollar of income is assigned a purpose, so income minus expenses equals zero.
Lifestyle Inflation
The tendency to increase spending as income rises, preventing growth in savings and wealth despite higher earnings.
Emergency Fund
A liquid cash reserve set aside to cover unexpected expenses or income loss, typically 3–6 months of essential living costs.
Cash Flow
The net amount of money moving in and out of your accounts over a given period — positive when income exceeds expenses, negative when it doesn't.