Estimate depreciation per mile driven.
Depreciation is the largest cost of running a modern car and the one drivers most often leave out, because it never appears on a receipt. Dividing the value lost by the miles driven converts it into a per-mile figure you can compare directly with fuel — and for a three-year-old car it is usually two to three times the fuel cost per mile. Both the annual and the per-mile views matter, because depreciation has a time component and a mileage component. A car standing on a driveway still loses value with age, so a low-mileage owner sees a very high cost per mile even though their total loss is smaller.
Depreciation Per Mile
Total depreciation = purchase price - current value; per mile = total / miles driven; per year = total / years owned; share lost = total / purchase price x 100
On a car three years old or newer it is usually the bigger number — often 25-35 cents a mile against 12-15 for fuel. On a ten-year-old car the ranking reverses.
Low annual mileage. Cars lose value with age as well as use, so a driver covering 5,000 miles a year spreads the same time-based loss over a quarter of the distance.