True Cost of Car Ownership Calculator

• Counts depreciation, financing, fuel, insurance, maintenance, tyres, tax and fees over your actual holding period.
• Reports cost per mile, which is the only basis on which two different cars can honestly be compared.
• Flags the case where the loan outlasts the car or leaves you underwater at the point of sale.
• Shows the share each cost takes, which is usually a surprise the first time.

How to use this calculator

Enter the price, the down payment, the financing and how long you actually intend to keep the car. Annual mileage matters as much as price: cost per mile falls with use, and total cost rises with it.

The advanced fields hold the assumptions that vary most between vehicles — fuel economy, insurance, maintenance and the two depreciation rates. For an electric car, enter miles per gallon-equivalent and set the fuel price to the equivalent cost of charging.

The output to look at first is cost per month, because it is directly comparable to the payment you were quoted and is usually much larger.

How the total is built

Resale value  = price × (1 − year-1 rate) × (1 − later rate)^(years − 1)
Depreciation  = price − resale value
Fuel          = miles ÷ mpg × price per gallon
Interest      = cumulative interest over the holding period

Total cost = depreciation + interest + fuel + insurance
             + maintenance + tyres + registration + sales tax + fees
Cost per mile = total cost ÷ total miles

Depreciation is modelled as a steeper first year followed by a level annual rate, which is the shape it actually takes. Both rates are editable because a truck, a luxury saloon and an electric hatchback behave very differently.

Note that the total is an economic cost, not a cash-flow figure. The calculator also reports net cash out of pocket after selling the car and clearing any remaining loan, which is the number your bank account experiences.

A worked example

A $38,000 car, $5,000 down, financed over five years at 7.5%, kept seven years and driven 12,000 miles a year.

At 20% depreciation in year one and 12% thereafter, it is worth about $14,118 after seven years — so depreciation alone is $23,882. Interest comes to about $6,675, fuel to $10,200 at 28 mpg and $3.40 a gallon, and insurance, maintenance, tyres, registration and tax add the rest.

Total cost of ownership is about $64,000 over seven years: roughly $762 a month, or 76 cents a mile, against a loan payment of about $661. The payment was never the cost.

What actually moves the number

How long you keep it. Depreciation is front-loaded, so spreading it over more years lowers the cost per mile substantially. This is the single largest lever available and it costs nothing.

Buying used. Letting someone else absorb the first two or three years of depreciation is the same lever pulled at the other end. The trade-off is warranty coverage and repair risk.

Annual mileage. A cheap car driven 25,000 miles a year can easily cost more per year than an expensive one driven 6,000. Fuel and maintenance scale with use; depreciation partly does.

Financing term. A longer term lowers the payment, raises the interest and keeps you underwater longer — which limits your ability to sell when you want to rather than when the loan allows.

Assumptions and limitations

• Flat annual costs. Insurance and maintenance are entered as constants. In practice insurance falls as the car ages and maintenance rises steeply once the warranty ends.
• Simple depreciation curve. Two rates, applied uniformly. Real resale values respond to model reputation, mileage bands and the used-car market at the moment you sell.
• No opportunity cost. The down payment could have been invested; that is not counted.
• Excludes some real costs. Parking, tolls, cleaning and GAP insurance are not included.
• No tax deduction. Business use can change the picture materially and is not modelled.

Common mistakes

Comparing monthly payments between cars. The payment reflects the loan, not the car. Two cars with identical payments can differ by thousands a year in true cost.

Ignoring depreciation because it is invisible. It is realised in full on the day you sell, and it is usually the biggest line.

Optimising hard on the interest rate. Worth doing, but the rate typically affects a few thousand dollars while resale value affects tens of thousands.

Assuming a longer loan is cheaper because the payment is lower. It is more expensive, and it keeps you underwater for longer.

Frequently asked questions