True Cost of Ownership Calculator

What this computes

People compare cars by sticker price and monthly payment. Both are poor proxies for what a car actually costs, because the largest expense — depreciation — appears on no statement and is felt only years later at trade-in. This calculator counts every real component and reduces it to two honest numbers: cost per year and cost per mile.

Enter the purchase price, the value you expect at resale, how long and how far you'll drive, and your fuel, insurance, and maintenance figures. It sums depreciation, running costs, financing interest, and the return you give up on the capital, then shows which line dominates — usually not the one you'd guess.

The math

Six components, summed and normalized:

Depreciation     = price − resale value
Fuel             = (annual miles / MPG) × price × years
Insurance        = annual premium × years
Maintenance      = annual upkeep × years
Financing        = total loan interest over the hold
Opportunity cost = avg capital × return × years

Total / years    = cost per year
Total / (miles×years) = cost per mile

Average capital is the purchase price and resale value averaged — a clean approximation of how much money is locked in the depreciating asset over the period. Set the return to zero to see the pure cash cost.

A worked example

$35,000 car, worth $14,000 after 6 years, 12,000 miles/yr at 30 MPG and $3.50 gas, $1,600 insurance, $900 maintenance, $4,200 total loan interest, 5% return.

• Depreciation: $35,000 − $14,000 = $21,000
• Fuel over 6 yr: ≈ $8,400
• Insurance + maintenance: $15,000
• Total ≈ $56,000 → ~$9,300/yr, ~$0.78/mi

The most expensive thing about a car is the value it loses while parked in your driveway — and it's the one nobody puts on a budget.

How to use this

1. Compare cars on cost per year, not price. A cheaper car that depreciates fast can cost more per year than a pricier one that holds value. This is the number that settles it.
2. Test new vs 3-year-old. Run the same model both ways. The used car usually wins per-year because the first owner ate the depreciation cliff.
3. Be realistic about resale. It's the biggest lever. Use real used-value data for your exact model — and for the holding period, see the Car Depreciation calculator.
4. Pull financing interest from the loan. The Auto Loan calculator gives the total interest figure to enter here; use 0 for a cash purchase.

Why depreciation dominates

Of the six components, depreciation is almost always the largest, for three reasons:

• It's front-loaded. The steepest loss is in the first 1-3 years. Buying new means absorbing that cliff yourself; buying used means someone else did.
• It's invisible. There's no monthly depreciation bill, so it never enters a household budget — until the trade-in offer reveals it all at once.
• It scales with price. A more expensive car doesn't just cost more up front; it has more value to lose. A modest, slow-depreciating car can be dramatically cheaper per year than a luxury one with the same running costs.

The practical takeaway: the resale-value input matters more than almost anything else on this page. Optimizing fuel or shopping insurance is worthwhile, but choosing a car that holds value is where the real money is.

What this calculator doesn't model

• Rising maintenance with age. Upkeep is entered as a flat annual average; real costs climb steeply after warranty. Use a blended figure that includes the later years, or model a shorter hold.
• Inflation and price changes. Fuel, insurance, and parts costs drift over time. For multi-year holds, use conservative (higher) annual figures.
• Taxes, registration, and fees. Annual registration, property tax on vehicles (some states), and tolls aren't broken out — fold them into the maintenance or insurance line if material.
• Unscheduled major repairs. A transmission or engine failure out of warranty is a tail risk this average-cost model won't capture.