The sticker price of a car is the smallest number you will ever pay. Over 5 years of ownership, the purchase price typically accounts for less than half of what the car actually costs you. The rest comes from depreciation (which happens whether you drive or not), fuel, insurance, maintenance, repairs, and finance interest. Most buyers compare cars by MSRP, find one they like, and only discover the real cost after a few years of ownership when the numbers no longer add up. This calculator runs the full math upfront so you can see the true cost before you sign anything, and compare two vehicles head to head when you cannot decide between them.
If you are still working out what you can afford before you start comparing specific vehicles, run the numbers through the Car Affordability Calculator first, and use the Vehicle Depreciation Calculator for a focused look at resale value by class.
The Five Costs of Owning a Car
Total cost of ownership is the sum of five components that operate on different timelines and respond to different choices. The mix matters because it determines which vehicle is actually cheapest for your specific situation.
Depreciation is by far the largest cost for most vehicles. A new car loses 20-25% of its value in year one alone, another 15-18% in year two, then 8-12% per year for the next several years. Over 5 years, a typical mainstream vehicle loses 55-65% of its original value. Luxury European cars often lose 70% or more. Trucks and body-on-frame SUVs lose the least, sometimes only 30-40% over 5 years. Depreciation is invisible — it does not show up as a monthly bill — but it is the single biggest financial event in vehicle ownership.
Fuel or energy is the second largest variable cost for most drivers. At 12,000 miles per year, a 22 MPG vehicle burns about $1,860 per year in gas at $3.40 per gallon. The same miles in a 35 MPG hybrid is about $1,170. An EV at 30 kWh per 100 miles and $0.16 per kWh costs about $576 per year. Multiply those differences across a 5 to 10-year ownership horizon and fuel choice alone moves the total cost by $6,000 to $15,000.
Insurance ranges from $1,000 to $3,000 per year for most drivers. New, expensive, and high-performance vehicles cost more to insure than older, cheaper, and mainstream vehicles. Younger drivers, drivers with tickets, and drivers in dense urban areas pay more. Full coverage is required while you are financing, so if you finance the vehicle you cannot drop to liability-only until the loan is paid off.
Maintenance and repairs are low in the first three years (mostly under warranty), modest in years 4-6 (out of warranty, more wear items), and significant from year 7 onward. The shape of this cost curve varies dramatically by vehicle class. EVs have far lower maintenance (no oil changes, fewer brake replacements due to regenerative braking, no exhaust). European luxury cars have far higher maintenance (more complex systems, expensive parts, dealer-only diagnostics). Trucks fall in the middle but get expensive on the brake side because of the weight.
Finance interest is the cost of borrowing money to buy the vehicle. A $35,000 loan at 7% APR over 60 months costs about $6,580 in total interest. The same loan at 5% APR costs $4,630. The same loan over 72 months at 7% APR costs $7,975. Loan APR and term are usually the cheapest cost to reduce — improving your credit before buying, putting more money down, and choosing a shorter term all shrink this number quickly.
Why Depreciation Is the Real Story
Most buyers focus on monthly payment, which mixes finance interest with principal repayment. The principal repayment portion is not actually a cost — it is converting cash into vehicle equity. The real cost components of monthly ownership are the interest portion of the payment, plus depreciation, plus insurance, plus fuel, plus maintenance.
On a typical new $35,000 mainstream sedan with 5-year financing, the first-year monthly cost breakdown looks roughly like this: depreciation $580, fuel $155, insurance $135, finance interest $145, maintenance $40. That is $1,055 per month of actual cost, even though the loan payment is only around $700.
The reason this matters: when you compare two cars by monthly payment alone, you are ignoring 30-40% of the actual cost. A truck with a $700 payment might cost $1,150 per month all-in. A hybrid with a $750 payment might cost $950 per month all-in. The monthly payment told you the truck was cheaper. The total cost of ownership tells you the hybrid is cheaper. Both can be true at the same time, which is why this calculation matters.
Vehicle Class Matters More Than Brand
The calculator uses 8 vehicle classes because depreciation curves, maintenance costs, and fuel patterns differ predictably by class regardless of brand.
Body-on-frame trucks and SUVs (F-150, Silverado, Tacoma, 4Runner, Wrangler) depreciate slowest. They also carry the highest fuel cost and modest maintenance. Over 10 years they often end up close to mainstream vehicles in total cost because the depreciation savings offset the fuel and insurance hit.
Mainstream sedans and crossovers (Camry, Accord, RAV4, CR-V, Pilot) are the baseline. Average depreciation, average fuel, average maintenance, average insurance. These vehicles are popular precisely because the cost profile is predictable and contained.
Luxury European (BMW, Mercedes, Audi, Porsche, Volvo) carry the worst combination. Fast depreciation (a 5-year-old 7 Series is worth 25-30% of MSRP), expensive maintenance (1.7x mainstream multiplier in the calculator), expensive parts, and high insurance. They are beautiful cars and they are expensive to own.
Electric vehicles have the lowest maintenance cost (about 55% of a gas equivalent), the lowest energy cost in most regions, but varying depreciation. Tesla holds value better than most. Other EVs (Bolt, Leaf, ID.4) often depreciate fast as battery technology improves and federal incentives shift the market.
Hybrids are often the lowest total-cost choice across long horizons. Strong fuel economy, low maintenance (85% of mainstream multiplier in the calculator), reliable resale, no charging logistics.
How to Use This Calculator
Start in single vehicle mode if you are evaluating one specific car. Plug in the purchase price (out-the-door price including taxes and fees), down payment, APR, loan term, and vehicle class. Then enter the shared inputs: ownership years (3, 5, 7, or 10), annual miles, and gas price for your region. Specific to the vehicle, enter MPG (or kWh per 100 miles for EVs) and annual insurance cost.
The result shows total cost, cost per mile, cost per month, and estimated resale value at the end of your ownership horizon. The breakdown bars show where the money goes — usually depreciation is the largest bar, followed by fuel, insurance, maintenance, and interest. Year-by-year breakdown is implicit in the numbers but the bars give you the proportional view at a glance.
Switch to compare two vehicles mode when you cannot decide between options. The calculator runs both vehicles with the same shared inputs (you drive them both the same way) but lets you set different purchase price, vehicle class, MPG, insurance, and financing terms for each. The verdict card at the bottom names the cheaper vehicle by total dollars and tells you how much per year and per month the difference works out to.
Try the same vehicle at different ownership horizons. A car that looks expensive at 3 years often becomes much cheaper at 10 years because the upfront depreciation hit gets averaged over more time. A vehicle with poor reliability ratings looks cheap at 5 years but breaks ugly at 10. The horizon matters.
What the Calculator Does Not Model
Honesty about limitations matters more than appearing comprehensive. The calculator excludes several real costs.
Collision repair from accidents is not modeled because it depends on driver and luck, not vehicle class. Insurance handles the financial side if you have full coverage but your deductible and rate hike are out-of-pocket.
Major catastrophic failures (engine replacement, transmission replacement, battery pack replacement on EVs) are not modeled because they are statistical tail events. Some owners hit them, most do not. Maintenance estimates assume scheduled service plus typical wear items.
Tax incentives and rebates on EVs are not included because they change frequently and depend on the buyer’s tax situation. If you qualify for a $7,500 federal EV credit, subtract it from purchase price before plugging in.
Regional cost variation is significant. Insurance in Detroit is roughly 3x insurance in rural Vermont for the same driver and vehicle. Gas prices vary by $1+ per gallon between states. Electricity rates vary 4x across regions. Use your real local numbers.
Common Questions
Why is depreciation included as a cost if I never sell the car?
Because you eventually do. Even if you drive a car for 15 years until it is worthless, you experienced the full depreciation cost across those 15 years. It just happened gradually instead of being realized in a single transaction. If you trade in or sell at any point, the depreciation is realized immediately as the difference between what you paid and what you receive. Either way, the car loses value, and that value loss is a real cost of ownership even if you never write a check for it.
How accurate are the depreciation rates by class?
The class-based depreciation rates reflect real-world averages from Black Book, iSeeCars, and KBB residual studies. Specific models within a class can vary significantly — a Toyota Tacoma holds value much better than the average compact truck, while a Nissan Frontier underperforms. For a specific make/model resale lookup, KBB or Edmunds will give you the actual depreciation curve for that vehicle. The calculator gives you a directionally correct estimate for the class.
Why does luxury European cost so much more even though I love the cars?
Three reasons stack up. Depreciation runs faster (a 5-year-old E-Class is worth about 35% of MSRP vs 50%+ for a Camry). Maintenance runs 60-70% higher due to more complex systems, more sensors, and parts that are dealer-only or carry premium pricing. Repair costs spike after the warranty expires (year 4 or 5), and many BMW, Mercedes, and Audi vehicles need significant work in years 5-8 that mainstream Japanese cars do not. The cars are wonderful to drive. They are also expensive to own. Both are true.
Are EVs actually cheaper to own?
Usually yes, if you have reliable home charging and drive in a region with reasonable electricity rates. EVs save dramatically on fuel ($500-800/year vs $1,500-2,500/year for gas equivalents), save on maintenance (no oil changes, less brake wear, no exhaust system, fewer fluids), and on most modern models the depreciation has narrowed considerably. Tesla holds value well. The cost case gets weaker if you rely on public DC fast charging frequently (Tesla Supercharger or Electrify America rates are roughly equivalent to gas), if you live somewhere with very high electricity costs (over $0.25/kWh), or if you buy an early-generation EV with rapid battery technology obsolescence pricing it down faster than expected.
Should I buy new or used to minimize total cost?
Used wins on total cost almost every time, especially in the 3 to 5-year-old range. You skip the worst depreciation years (the first two), pay much less in interest because the loan is smaller, and often pay less in insurance because the vehicle value is lower. The tradeoff is shorter remaining warranty (sometimes zero), more uncertainty about prior maintenance history, and a higher chance of out-of-warranty repairs. The Used Car Inspection Checklist exists exactly to help with the used-car risk side of this equation.
Does this calculator account for inflation?
Partially. Fuel and insurance escalate at 3% per year (the long-run average inflation rate), which reflects how those costs actually behave. Maintenance does not escalate explicitly in the calculator because the maintenance cost curve is already increasing by age — older vehicles need more work, and that pattern is captured. Depreciation is not inflation-adjusted because depreciation tracks nominal vehicle value, not real value. For most decision-making purposes, the calculator gives you costs in roughly today’s dollars over your ownership horizon.
What if I pay cash and skip the financing?
Set the down payment equal to the purchase price and APR to 0, or just look at the cost breakdown bars and ignore the finance interest portion. Paying cash saves the interest cost but commits the cash, which has its own opportunity cost — that money could have been earning 4-5% in a money market account or 7-10% long-term in index funds. The right call depends on the rate spread. Cash makes sense when loan APR is high (8%+). Financing makes sense when loan APR is low (under 5%) and you have somewhere productive to invest the cash instead.
How do I estimate insurance before I have a quote?
Get a real quote before you sign anything. The defaults in the calculator ($1,600-1,800/year) are reasonable averages but they can be wildly off for your specific situation. Most insurance companies will give you a quote on a specific VIN in under 5 minutes online. Doing this before purchase prevents the surprise of insurance running $400/month instead of the $130/month you assumed.
Should I lease instead of buy if I want lower total cost?
Almost never. Leasing has lower monthly payments but the total cost over a comparable timeframe is usually higher because you pay for depreciation plus interest the entire time and own nothing at the end. Leasing makes sense when you value low payments and a new car every 2-3 years more than equity, when you drive low miles (under 10,000/year), or when the manufacturer is offering subsidized lease deals that genuinely beat buying. Use the Car Lease Calculator for the lease-vs-buy comparison head to head.
Why We Built This
The auto industry has spent decades training buyers to evaluate cars by monthly payment. Monthly payment is the smallest meaningful unit a buyer can think about, and it is the most misleading one because it hides the much larger costs that show up over years instead of months. We built this calculator because the most expensive car you can own is usually not the one with the highest sticker price — it is the one whose depreciation, fuel, and maintenance profile does not match your usage. A truck driven 5,000 miles a year is cheap. A luxury sedan driven 25,000 miles a year is brutal. The math will not stop you from buying the wrong car for your situation. It will just tell you what the wrong car will cost. You can be the mechanic, and you can also be the cost-of-ownership analyst.
Help Us Make This Tool Better
Total cost of ownership math is approximate by nature — your actual numbers will differ based on region, driving style, maintenance habits, and luck. If you ran the calculator against a vehicle you actually own and the numbers were significantly off from your reality, send us the details. We adjust the multipliers when readers report consistent gaps between the model and the real world.