What a car really costs to own
The true cost of owning a car is its depreciation plus finance interest, fuel or electricity, insurance, servicing, tyres, tax and the incidentals — and depreciation is usually the largest line, which is why both the sticker price and the monthly payment understate it.
Worked example: with Purchase price of 32,000, this model computes Total cost of ownership of 40,134.45. See the full breakdown.
✓ 3 self-test cases · assumptions shown No rates to go out of date · reviewed 2026-08-02
How car total cost of ownership is worked out
Most car cost calculators ask for the monthly payment and stop there. That answers the wrong question: the payment is what leaves your account, but the cost is what the car consumes. The biggest single line is depreciation — the difference between what you paid and what the car is worth when you sell it — and it never appears on a statement.
This model adds up eight things: depreciation over the years you keep it, interest on whatever you financed, energy (litres or kWh at the price you pay), insurance, servicing and a repairs allowance, tyres amortised over their life in kilometres, road tax and inspection, and the incidentals — parking, tolls and breakdown cover. Each is an input, so you can price your own car rather than an average one.
The two outputs worth reading are the cost per kilometre and the depreciation share. Cost per kilometre is what makes two cars comparable when you drive them different distances. The depreciation share tells you how much of your money is going into an asset that is quietly evaporating — on a typical new car it is around 40% of everything you spend.
Worked example
| Purchase price | 32000 |
|---|---|
| Deposit | 6000 |
| Finance APR (%) | 6.5 |
| Finance term (months) | 60 |
| Years you keep it | 5 |
| Distance per year (km) | 15000 |
| Financed Amount ✓ | 26000 |
| Monthly Rate | 0.005416666666666667 |
| Energy Cost Per Year ✓ | 1706.25 |
| Tyre Cost Per Year ✓ | 192 |
| Fixed Cost Per Year ✓ | 1960 |
| Resale value at the end ✓ | 15680 |
| Compound Factor | 1.382817324206292 |
| Depreciation ✓ | 16320 |
| Monthly finance payment ✓ | 508.72 |
| Finance interest ✓ | 4523.2 |
| Total cost of ownership ✓ | 40134.45 |
| Cost per km ✓ | 0.5351 |
| Cost per month ✓ | 668.91 |
| Depreciation share ✓ | 40.7 |
Every row is computed by the engine from the inputs above. Rows marked ✓ are additionally pinned by a published self-test vector.
Frequently asked questions
What is the true cost of owning a car?
Add depreciation, finance interest, fuel or electricity, insurance, servicing and repairs, tyres, road tax and inspection, and incidentals like parking and tolls. On a mid-priced new car kept five years, depreciation alone is usually the largest single item — often around 40% of the total.
Is an electric car actually cheaper to run?
Usually on energy and often on servicing, but that can be offset by a higher purchase price and therefore a larger depreciation figure. Switch the fuel type to electric, enter kWh per 100 km and your electricity price, and the model re-prices every year so you can see whether the energy saving covers the difference.
Why is depreciation counted as a cost when I have not sold the car?
Because you will. The money is gone the moment the value falls, whether or not you have realised it. Ignoring depreciation is what makes a cheap monthly payment on an expensive car look affordable.
Does buying with cash make a car cheaper?
It removes the finance interest, which the model shows as its own line. It does not remove depreciation, and it has its own cost: the return that money would have earned elsewhere. Set the deposit to the full price to see the interest-free total.
Sources
Projection, not advice. The badge means the engine reproduces this model's own arithmetic through 3 self-test cases. It says nothing about whether the assumptions above will hold — nobody can verify a forecast. What this page offers instead is that every assumption is visible, editable, and traceable to the figure it moves.
Check the arithmetic yourself: how this calculator is verified — the formula behind every derived value, the 3 test cases the engine reproduces, and what the badge does and does not claim. Also available as machine-readable JSON.
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