How this calculator works
The sticker price and the loan payment are only part of what a car actually costs. This calculator adds up the full picture over your ownership period: how much value the car loses to depreciation, how much interest you pay on any loan, fuel, insurance, maintenance and repairs, and registration fees — then reports the total, the cost per year, and the cost per mile or kilometer driven.
Depreciation and loan interest are tracked separately from the loan's principal payments, following the same convention used by well-known "true cost to own" style estimates: the money you pay toward principal converts cash into car equity, and that equity's loss over time is exactly what the depreciation line already measures, so counting the principal payments again as a separate cost would double count it.
The formulas
Depreciation loss = purchase price − purchase price × (1 − annual rate)^years ownedLoan interest = sum of each month's balance × (annual rate ÷ 12), for months actually ownedAnnual fuel cost (US) = (annual miles ÷ mpg) × price per gallonAnnual fuel cost (metric) = (annual km ÷ 100) × L/100km × price per literTotal cost = depreciation + loan interest + fuel + insurance + maintenance + registration, summed over years ownedDepreciation is modeled as a constant annual percentage compounding off the purchase price, a common simplification — real depreciation curves are steeper in the first year or two and then flatten. Loan interest only counts the months you actually own the car, even if the loan term runs longer.
Worked example: $30,000 car, $5,000 down, 6% over 60 months, 5 years owned
- Depreciation: 30,000 × (1 − 0.15)^5 ≈ $13,311 remaining value, so the loss is 30,000 − 13,311 ≈ $16,689.
- Loan interest: financing $25,000 at 6% over 60 months, the loan is paid off exactly within the 5-year ownership period, with total interest ≈ $3,999.
- Fuel: (12,000 miles ÷ 28 mpg) × $3.50 = $1,500/year × 5 years = $7,500. Insurance, maintenance and registration add 1,400 + 800 + 200 = $2,400/year × 5 = $12,000.
- Total ≈ 16,689 + 3,999 + 7,500 + 12,000 = $40,188 over 5 years — about $8,038/year, or $40,188 ÷ 60,000 miles ≈ $0.67/mile.
Frequently asked questions
Why isn't the down payment or loan principal listed as a cost?
Paying down a loan's principal converts cash into car equity — it isn't a net cost by itself. The depreciation line already measures how much of that equity you lose over time, so the total cost counts depreciation and loan interest, not principal payments, to avoid double counting.
Is a flat annual depreciation percentage realistic?
It's a simplification. Real cars typically lose more value in the first year or two and less in later years, so a constant percentage understates early losses and overstates later ones somewhat. Adjust the rate up if you expect a steeper early drop, or check published depreciation curves for your specific model.
What if I pay cash instead of financing?
Set the down payment equal to the purchase price. The loan interest becomes zero and the total cost reflects only depreciation, fuel, insurance, maintenance and registration.
Does this include resale value at the end of ownership?
Depreciation loss already represents the value the car has lost by the end of your ownership period — the remaining value (purchase price minus that loss) is an implied estimate of what the car could be worth if sold then, similar to the resale value field in the lease vs buy calculator.
Why does cost per mile matter if I already see the total cost?
It standardizes the cost across different amounts of driving, making it easier to compare against a different car, a lease, or public transit and rideshare costs on a like-for-like basis.