What Is Depreciation Cost Per Mile?

Depreciation is the loss in value of your vehicle over time.

When you buy a car for $40,000 and sell it later for $20,000, you did not just “lose value.” You spent $20,000 using that vehicle.

Now divide that loss by the miles you drove.

That gives you depreciation cost per mile.

Simple Formula

Depreciation Cost Per Mile = 
(Purchase Price – Sale Value) ÷ Total Miles Driven

Example:

• Purchase price: $40,000
• Sale value: $20,000
• Miles driven: 80,000

Depreciation = $20,000
Depreciation per mile = $20,000 ÷ 80,000 = $0.25 per mile

That means every mile cost you 25 cents in value loss alone.

Why Depreciation Matters More Than Fuel

Fuel feels expensive because you see it every week.

Depreciation feels invisible because you don’t pay it monthly.

But in most cases, depreciation is the largest ownership cost.

For many vehicles, depreciation makes up 40% to 60% of total ownership cost.

That is why a depreciation cost per mile calculator is useful. It shows you the hidden cost.

How the Depreciation Cost Per Mile Calculator Works

The calculator you shared performs three main steps:

1. Collect input data
2. Calculate depreciation and ownership costs
3. Break everything down per mile

Let’s walk through each part.

Step 1: Input Information

The calculator asks for:

Vehicle Information

• Vehicle type (compact, midsize, SUV, truck, luxury)
• Purchase price
• Current mileage
• Projected sale mileage
• Projected sale value
• Ownership years
• Annual mileage

Cost Inputs

• Annual insurance
• Annual fuel
• Annual maintenance
• Annual repairs
• Taxes and fees

Depreciation Method

You can choose:

• Straight-Line
• Double-Declining Balance
• Sum of the Years’ Digits
• Market-Based

This makes the calculator flexible for both personal and financial analysis.

Depreciation Methods Explained

Different depreciation methods produce different yearly values. The total loss may be the same, but the timing changes.

1. Straight-Line Depreciation

This method spreads depreciation evenly across ownership years.

Formula:

(Purchase Price – Sale Value) ÷ Years

Best for:

• Simple budgeting
• Predictable planning

It assumes the car loses value evenly every year.

2. Double-Declining Balance

This method depreciates the vehicle faster in early years.

New cars usually lose the most value in the first 2–3 years. This method reflects that reality.

Best for:

• Realistic modeling of new vehicles
• Business accounting

3. Sum of the Years’ Digits

This is another accelerated depreciation method.

It also front-loads depreciation but in a slightly smoother way than double-declining.

Best for:

• Accounting use
• Medium-term ownership analysis

4. Market-Based Depreciation

This method uses estimated resale value and market trends.

It reflects real-world vehicle value behavior instead of fixed formulas.

Best for:

• Practical ownership planning
• Used vehicle analysis

Total Cost Per Mile vs Depreciation Cost Per Mile

Depreciation is only part of the story.

The calculator also computes:

Operating Cost Per Mile

Includes:

• Fuel
• Maintenance
• Repairs

Fixed Cost Per Mile

Includes:

• Depreciation
• Insurance
• Taxes and fees

Total Cost Per Mile

Total Ownership Cost ÷ Total Miles Driven

Example:

If total ownership cost is $45,000 over 75,000 miles:

Total cost per mile = $45,000 ÷ 75,000 = $0.60 per mile

That means every mile costs 60 cents overall.

This is the number that truly defines your vehicle expense.

What Is Considered a Good Cost Per Mile?

While results vary, here is a general guideline:

Depreciation Cost Per Mile

• Under $0.25 → Strong value retention
• $0.25–$0.50 → Average
• Above $0.50 → High depreciation

Total Cost Per Mile

• Under $0.60 → Efficient ownership
• $0.60–$1.00 → Typical range
• Above $1.00 → Expensive vehicle to operate

Luxury vehicles and large trucks often land in the higher range.

Used compact cars often fall in the lower range.

Break-Even Analysis

The calculator also includes break-even calculations.

It shows:

• Break-even miles
• Break-even years
• Monthly cost
• Daily cost
• Cost per hour

This is useful when comparing:

• Buying vs leasing
• New vs used
• Two different vehicles

It turns emotional buying decisions into math-based decisions.

Real-World Example

Let’s say you choose:

• New midsize car: $35,000
• Ownership: 5 years
• Sale value: $17,000
• Annual mileage: 12,000
• Insurance: $1,500
• Fuel: $2,000
• Maintenance: $800
• Repairs: $500
• Taxes: $2,000

After calculation, you might see:

• Depreciation per mile: $0.30
• Total cost per mile: $0.72
• Monthly ownership cost: around $850

Now you can compare that against another vehicle.

Without guessing.

Why This Calculator Is Useful

This depreciation cost per mile calculator does more than basic math.

It provides:

• Depreciation schedule table
• Cost breakdown by category
• Value retention percentage
• Investment return estimate
• Fixed vs variable cost analysis
• Cost efficiency (miles per dollar)

That level of detail helps with:

• Budget planning
• Business vehicle analysis
• Fleet management
• Personal finance decisions

How to Reduce Depreciation Cost Per Mile

You cannot eliminate depreciation. But you can reduce it.

Here are practical ways:

1. Buy Used Instead of New

Most depreciation happens in the first 3 years.

2. Choose Vehicles with Strong Resale Value

Research resale history before buying.

3. Avoid Overpaying

Negotiation directly reduces depreciation loss.

4. Keep Mileage Reasonable

Higher mileage reduces resale value faster.

5. Maintain the Vehicle Properly

Service records increase resale confidence.

Who Should Use a Depreciation Cost Per Mile Calculator?

This tool is useful for:

• First-time car buyers
• Budget-conscious families
• Business owners
• Rideshare drivers
• Fleet managers
• Financial planners

If you drive a vehicle, this number affects you.