What does a car really cost to own?

Ask someone what their car costs and they will tell you the payment. It is the number they see every month, so it is the number they know.

It is also, on a typical car over a typical ownership period, well under half of what the car actually costs.

The full list

• Depreciation — the difference between what you paid and what you sell for
• Interest on the loan, which is separate from the principal you would have paid anyway
• Sales tax, paid once and rarely counted afterwards
• Fuel or electricity
• Insurance
• Routine maintenance — oil, tires, brakes, filters
• Repairs, which rise sharply as the car ages
• Registration and fees, annually

Add those up over the years you actually keep the car, and you have the real number. The total cost of ownership calculator does exactly that and shows each line as a share of the whole.

Depreciation is almost always the largest line

Take a $36,000 car kept seven years and sold for $14,000. That is $22,000 of depreciation — about 61% of the purchase price, gone.

Over the same seven years, fuel at 13,000 miles a year and 29 mpg at $3.35 a gallon comes to roughly $10,500. Insurance at $1,650 a year is $11,550. Maintenance and repairs together might be $7,000.

Depreciation beats every one of them, usually by a wide margin, and frequently comes close to matching several combined.

That has a practical consequence: the single most effective way to reduce what a car costs you is to buy one that depreciates less, or to buy one that has already done its depreciating. Shaving a percentage point off the loan rate is a rounding error by comparison.

The costs people leave out

Sales tax. On a $36,000 car at 6.5% that is $2,340, paid at purchase and then forgotten. It is a real cost of acquiring the car and belongs in the total.

Interest as distinct from the payment. Your payment contains principal you would have paid in cash anyway. Only the interest is a cost of financing. Counting the whole payment as a cost double-counts the car.

Repairs rising with age. A seven-year total with a flat repair figure understates the back half. Repairs in year seven are not repairs in year two, and a model that assumes they are will flatter a long hold.

Opportunity cost. Money in a car is money not invested. Worth knowing about; not worth modelling precisely, since it turns one estimate into two.

Where the cost per mile actually lands

Dividing the total by the miles driven gives a figure that is far more useful than the payment for comparing options, and it produces some counterintuitive results:

• Driving more miles usually lowers cost per mile, because depreciation and insurance are largely fixed regardless of use.
• Keeping a car longer lowers cost per mile, because the steep part of depreciation is spread over more miles — right up until repairs take over.
• A cheaper car with poor resale can cost more per mile than a more expensive one that holds value.

What to do with this

1. Estimate the resale value honestly. It is the largest input and the one people are most optimistic about. Look up actual sale prices for the model at the age you plan to sell, not what you hope.
2. Count sales tax and fees. They are real and they are usually missing.
3. Compare total cost, not payment. Two cars with identical payments can differ by $10,000 over seven years.
4. Let the length of the hold do the work. The cheapest mile you will ever drive is in a car you already own and have finished depreciating.
5. Check the insurance quote before buying, not after. It varies more by model than people expect, and it is a cost for as long as you own the car.

The payment tells you what you can afford this month. The total cost tells you what the decision was worth, and they are frequently not the same ranking.

Sources: depreciation, fuel, insurance and repair figures computed with this site's own model on a $36,000 car held seven years — the calculator's own example. Five-year depreciation benchmarks from iSeeCars, March 2026, read from the same constants the calculators use.