Home / True Cost of Car Ownership
True Cost of Car Ownership
Roll depreciation, fuel, insurance and maintenance into one real annual number.
Why does owning a car cost more than the purchase price?
When people talk about what a car costs, they usually think only of the purchase price or the monthly loan payment — but the fuel you pay for at the pump is only part of the story. Depreciation — the drop in a car's value over time — is usually the biggest and most invisible cost of ownership, because nobody sends you a bill for it. This calculator estimates annual depreciation as the purchase price minus the estimated residual value, divided by the number of years, then adds annual fuel cost (based on annual mileage and fuel economy), annual insurance and maintenance to get your real annual cost.
The final number — cost per mile — is more useful for real comparisons than the raw annual figure: it lets you directly compare two cars with different annual mileage, or compare driving your own car against ride-hailing or a rental. Keep in mind that residual value and depreciation rate are estimates that depend on the used-car market and your specific model; you can tune them using listings for comparable cars or your own experience.
Frequently asked questions
Why is depreciation considered the biggest hidden cost of a car?
Because nobody bills you for it — the drop in a car's value happens over time but you only really feel it when you go to sell, unlike fuel or insurance which you pay every month.
How do I estimate my car's residual value?
You can look up prices for the same make, model and year in used-car listings, or use an approximate annual depreciation rate (commonly 10-15% for an ordinary car), which this calculator also offers as an alternative input.
Does this calculator account for unexpected repair costs?
Only to the extent you build it into the annual maintenance field as an average estimate. Large, unexpected costs like an accident or a transmission failure aren't captured in this routine annual estimate.
Why does cost per mile matter?
Because it lets you compare directly between different cars, or between keeping your current car and buying a new one, regardless of how many miles each one covers per year.