How this calculator works
Depreciation is the purchase price minus an estimated resale value (a larger first-year drop, then a steady yearly rate). Fuel is miles ÷ mpg × gas price. Insurance, maintenance and registration are yearly costs, and loan interest comes from a 60-month loan for the years you own the car.
Worked example
With the example values below: Total cost over 5 years, $47,452 ($791 a month, $0.79 per mile). Change any number above to run your own.
What you enter
| Input | Example |
|---|---|
| Purchase price | $35,000 |
| Years of ownership | 5 yrs |
| Miles per year | 12,000 |
| Fuel economy (mpg) | 30 |
| Gas price / gallon | $3.25 |
| Insurance / yr | $1,800 |
| Maintenance & repairs / yr | $900 |
| Registration & fees / yr | $200 |
| Loan APR | 7.5% |
| Down payment | $5,000 |
| First-year depreciation | 20% |
| Later depreciation / yr | 15% |
What true car ownership costs include
AAA's annual estimates put the average cost of owning a new car at roughly $11,000 to $12,000 a year once all of these are included.
- Depreciation: the drop in value from what you paid to what you could sell for. It's usually the largest cost.
- Fuel or charging: miles driven divided by fuel economy, times the price of fuel.
- Insurance: often $1,500 to $3,000 a year, much more for young drivers.
- Maintenance and repairs: oil changes, tires, brakes and unexpected repairs, rising as the car ages.
- Registration, taxes and fees.
- Financing: interest on your loan.
Depreciation in detail
New cars typically lose around 20% of their value in the first year and roughly half within five years, though trucks and some brands hold value better. Depreciation is invisible month to month, but it's real money you lose when you sell or trade in.
Buying a lightly used car, keeping a car longer, and choosing models with strong resale values all reduce it. The longer you keep a car, the lower its depreciation per year.
Cost per mile
Dividing total yearly cost by miles driven gives a cost per mile, a useful number when comparing cars, deciding whether to keep an older car, or weighing a long commute. If a car costs $9,600 a year to own and you drive 12,000 miles, it costs $0.80 a mile.
For comparison, the IRS standard mileage rate for business use is set each year to reflect average per-mile costs.
Lowering the cost
Shop insurance every year or two, keep up with maintenance to avoid bigger repairs, and compare fuel economy carefully when buying. Consider an electric or hybrid if you drive a lot. Before buying, use the car affordability calculator to set a price limit and the auto loan calculator to compare loan terms.
Frequently asked questions
How much does it cost to own a car per year?
AAA's recent estimates put the average for a new car at roughly $11,000 to $12,000 a year, including depreciation, fuel, insurance, maintenance, registration and financing. Older paid-off cars cost much less, mostly fuel, insurance and repairs.
What is the biggest cost of owning a car?
Depreciation, for most new cars. It's often followed by insurance and fuel. For older cars, repairs and maintenance become a larger share.
How do you calculate the cost per mile of a car?
Add up a year of costs (depreciation, fuel, insurance, maintenance, registration and loan interest) and divide by the miles you drive that year.
How much does a car depreciate per year?
Roughly 20% in the first year and 10% to 15% a year after that for many cars, so a typical car is worth about half its original price after five years. Rates vary by make, model and mileage.
Is it cheaper to keep an old car or buy a new one?
Usually cheaper to keep a reliable older car, because most depreciation has already happened. Replacement makes more sense when repairs become frequent and expensive or the car is no longer safe.
Grow what this calculator projects.
TruthSayer AI sends quantitative stock signals across valuations, earnings and dark-pool activity, each one traded in its own funded account first.
Estimates for planning only, not financial, tax or legal advice. Tax tools use 2026 federal figures (brackets, $16,100 / $32,200 standard deduction, $19,000 gift exclusion, $15M lifetime exemption). Rates shown as defaults are examples; replace them with quotes you actually receive.