depreciation

After a house, a car is the biggest check most people write — and the one they think about least clearly. The trap is the price tag: people compare monthly payments and sticker prices and miss the two things that actually decide what a car costs them. A car's true cost of ownership is how much value it LOSES while you own it (depreciation) plus what you pay to BORROW (financing interest). Everything else — the monthly payment, the down payment — is just how you split those two costs across time. Seen that way, the famous advice 'buy a lightly-used car' stops being folksy wisdom and becomes arithmetic: a new car sheds roughly a fifth of its value in the first year and close to half in five, so buying the same model a few years old lets the first owner absorb that 'depreciation cliff' for you. Leasing is a different shape entirely — a low monthly payment that buys you a perpetually-new car but never any equity, so you pay forever and own nothing. This lesson races the all-in cost of all three paths over the years you keep the car. The headline: the cheapest way to put miles on a car is almost always to buy it a few years used and drive it for a long time; leasing's low monthly is the most expensive option in disguise; and the depreciation cliff, not the interest rate, is the number that dominates the decision.