About

The sticker price of a car is only the tip of the iceberg. The Total Cost of Ownership (TCO) reveals the hidden expenses that drain your wallet over time: rapid depreciation, insurance premiums, fuel consumption, and inevitable maintenance. Many buyers focus solely on the monthly loan payment, ignoring that these other factors can double their actual monthly cash outflow.

This tool aggregates all financial variables over a standard 5-year ownership cycle. It calculates the 'Real Cost per Month' and 'Cost per Mile,' providing a reality check that helps you decide if that upgrade is truly affordable.

Formulas

The TCO is the sum of all expenses minus the residual value of the car at the end of the period.

TCO = LoanCost + Fuel + Insurance + Maint − ResaleValue

We also calculate efficiency metrics:

CostPerMile = TCOTotalMiles

Reference Data

Expense Category	Estimated 5-Year Share	Notes
Depreciation	~40%	The largest hidden cost. Cars lose ~20% value in Year 1.
Fuel	~25%	Dependent on MPG and annual mileage.
Insurance	~20%	Varies by age, location, and driving history.
Maintenance	~10%	Tires, oil changes, and unforeseen repairs.
Taxes/Fees	~5%	Registration, title, and state taxes.

Frequently Asked Questions

Depreciation is the loss of value over time. If you buy a car for $30,000 and sell it 5 years later for $12,000, the $18,000 difference is a real cost you incurred, even though you didn't pay it as a monthly bill.

For a new car, maintenance is low (oil changes, tire rotations). As the car ages, expect to budget $50-$100 per month on average for brakes, tires, and battery replacements. We estimate roughly $1,000-$1,500 per year for average sedans.

Cost per mile helps you compare driving vs. other transport (Uber, train). If your car costs $0.75 per mile and your commute is 20 miles, you spend $15 just to get to work, not including parking.