What is the biggest cost of owning a car?
Depreciation is typically the single largest cost, followed by loan interest and insurance. A $35,000 car loses roughly $14,000 in value over the first 3 years.
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Calculate the true total cost of owning a car including payments, insurance, fuel, maintenance, and depreciation.
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Understanding true cost of ownership
The sticker price of a car is just the beginning. The true cost of ownership includes your monthly loan payment, insurance premiums, fuel or charging costs, routine maintenance, and the invisible cost of depreciation.
Most cars lose about 20% of their value in the first year and roughly 15% per year after that. This depreciation is the single largest cost of car ownership, yet most buyers ignore it.
True Monthly Cost = (Payments + Insurance + Fuel + Maintenance) / Months Owned Depreciation = Purchase Price - Resale Value after N years
Frequently asked questions
How much does it really cost to own a car per month?
The average American spends $900-$1,200 per month on total car ownership when you add up the payment, insurance, fuel, and maintenance. This is why financial advisors recommend the 20/4/10 rule.
Is it cheaper to own an EV?
EVs typically have lower fuel and maintenance costs (no oil changes, fewer brake replacements) but higher purchase prices and insurance. Over 5+ years, many EVs are cheaper to own overall.