How it works
Total cost of ownership (TCO) counts every dollar the car consumes while you own it, and leaves out money you get back. The calculator adds seven categories over the ownership period:
- Depreciation = purchase price − resale value, where resale value = price × resale %.
- Sales tax = price × tax rate, paid once at purchase.
- Fuel = (annual miles × years) ÷ MPG × fuel price.
- Insurance, maintenance and registration = each annual amount × years.
- Financing = loan interest paid during the years you own the car. The amount financed is price + sales tax − down payment. Interest is total payments made in the ownership window minus the principal repaid, using the exact amortization balance formula. If you sell before the loan ends, the remaining balance is paid off from the sale, so it is not a cost.
Total = depreciation + sales tax + fuel + insurance + maintenance + registration + interest
Per year = total ÷ years Per month = total ÷ (years × 12) Per mile = total ÷ (annual miles × years)
Principal is not counted as a cost in its own right. The part of the price you get back when you sell is returned as resale value, and the part you don’t get back is already counted as depreciation. Counting loan principal as well would double-count the car.
The $1,800 insurance and $900 maintenance figures in the form and the first example are illustrative examples, not averages. For comparison, AAA Your Driving Costs 2025 puts average full-coverage insurance at $1,694 a year and maintenance, repair and tires at 11.04 cents a mile for a new car. Use your own quotes where you can.
Assumptions
- Costs are in today’s dollars with no inflation. Fuel, insurance and repair costs usually rise over time, and repairs grow as a car ages.
- Opportunity cost on the down payment or cash price is not included.
- Parking, tolls, tickets, car washes and accessories are excluded; add them to maintenance if you want them counted.
Worked examples
$35,000 new crossover, 7% tax, kept 5 years, sold for 45%, financed with $5,000 down at 6.5% for 60 months
The car loses $19,250.00 as it falls to $15,750.00. Sales tax is $2,450.00. Driving 12,000 miles a year at 30 MPG and $3.25 a gallon costs $6,500.00 in fuel over 60,000 miles. Insurance adds $9,000.00, maintenance $4,500.00 and registration $1,250.00. Financing $32,450.00 costs $5,645.29 in interest. Total: $48,595.29, which is $9,719.06 a year, $809.92 a month or $0.81 a mile.
$22,000 compact paid in cash, 6% tax, kept 8 years, sold for 25%
Depreciation is $16,500.00, sales tax $1,320.00, fuel $8,125.00 at 32 MPG, insurance $10,400.00, maintenance $8,800.00 and registration $1,200.00, with no interest. The eight-year total is $46,345.00, or $482.76 a month and $0.58 a mile. Keeping a modest car longer spreads depreciation over more years.
Depreciation is usually the biggest cost
For a new car, depreciation often outweighs fuel or insurance. Many new vehicles lose a large share of their value in the first three to five years, with the steepest drop in year one. Buying a lightly used car lets someone else absorb that early loss, and keeping a car longer spreads the loss over more years and miles. Models with strong reputations for reliability tend to hold their value best.
How to lower your cost per mile
- Shop insurance every year or two. Rates for the same driver and car can differ by hundreds of dollars between insurers. Raising your deductible can also cut premiums.
- Get a lower loan rate. Check with a credit union before visiting the dealer, and consider a shorter term. Our auto loan calculator shows how much interest a rate cut saves.
- Follow the maintenance schedule. Routine oil, filter and fluid service is cheaper than the repairs neglect causes, and a documented history helps resale value.
- Drive efficiently. Use the MPG calculator to track your real economy and spot problems early.
- Buy for your needs. A bigger vehicle than you need costs more in every category: price, fuel, tires, insurance and registration.
Using cost per mile to make decisions
Once you know your true cost per mile, everyday choices get clearer. You can judge whether a mileage reimbursement from your employer really covers your costs, whether a second car is worth keeping for occasional use, or how a long commute compares with living closer to work. For a car you haven’t bought yet, run two or three candidate vehicles side by side with their own price, MPG, insurance quote and expected resale value. If you are weighing a lease, the lease vs. buy calculator compares the two head to head.
Frequently asked questions
What is included in the total cost of car ownership?
Depreciation, fuel, insurance, maintenance and repairs, loan interest, sales tax and registration or other annual fees. Together they show what the car really costs to own and drive.
Why isn’t the full purchase price counted?
Because you get part of it back when you sell. The calculator counts the price minus the resale value, which is depreciation. Adding the full price as well would count the same money twice.
How do I estimate resale value?
Look up current used prices for the same model at the age and mileage you expect to sell it. Resale value varies widely by make, model, mileage and condition, so a real listing beats any rule of thumb.
How is the financing cost calculated?
The calculator finds the interest paid during the years you own the car: total loan payments made in that time minus the principal repaid. If you sell before the loan ends, the payoff comes out of the sale price.
What is a typical cost per mile to own a car?
AAA Your Driving Costs 2025 estimates the average new car costs about 77 cents a mile to own and operate at 15,000 miles a year, and about $1.00 a mile at 10,000 miles, counting depreciation, finance, fuel, insurance, fees and maintenance. Older paid-off cars can cost much less.
Does this work for electric cars?
Yes. Enter miles per kWh as MPG and your electricity price per kWh as the fuel price. EVs often have lower fuel and maintenance costs but may have different insurance and depreciation.
Does the calculator include inflation?
No. All amounts are treated as constant. For longer ownership periods, consider raising the annual maintenance figure, since repairs usually grow as a car ages.