What is total cost of ownership for a car?

Total cost of ownership (TCO) includes all expenses of owning a vehicle: depreciation, financing, fuel, insurance, maintenance, repairs, registration, and taxes. TCO is typically 2-3x the purchase price over 5 years.

What is the biggest cost of car ownership?

Depreciation is typically the largest cost, accounting for 35-45% of total ownership costs. For a $40,000 new car, depreciation alone can cost $20,000+ over 5 years.

How much does it really cost to own a car per month?

The average total cost of car ownership is $900-$1,200/month for a new car and $600-$900/month for a used car, including all expenses (not just the car payment).

Is it cheaper to buy used to reduce total cost of ownership?

Usually yes. While used cars have higher maintenance costs, the massive reduction in depreciation (30-50% already absorbed) makes used vehicles cheaper to own overall.

Total Cost of Ownership Calculator: True Car Costs Explained

Total Cost of Ownership Breakdown

The sticker price is just the beginning. Here’s what car ownership really costs.

Overall TCO Summary

5-Year Total Cost of Ownership

Cost Category	New Car ($40,000)	3-Year Used ($25,000)	% of TCO
Depreciation	$20,000	$9,000	35-40%
Financing	$6,500	$4,800	10-12%
Fuel	$9,000	$9,000	15-18%
Insurance	$8,500	$6,500	12-15%
Maintenance	$3,500	$5,500	6-10%
Repairs	$1,500	$4,000	3-8%
Registration/Taxes	$2,500	$1,800	4-5%
Total 5-Year Cost	$51,500	$40,600
Monthly Cost	$858	$677
Cost Per Mile	$0.69	$0.54

Cost Breakdown by Category

1. Depreciation (35-40% of TCO)

Vehicle Age	5-Year Depreciation	Annual Cost
Brand new	50-60% of MSRP	$4,000-$5,000
1-2 years old	35-40%	$2,500-$3,500
3-4 years old	25-30%	$1,500-$2,500
5+ years old	15-20%	$750-$1,500

Example: $40,000 new car loses ~$20,000 in value over 5 years (50%)

2. Fuel Costs (15-18% of TCO)

Vehicle Type	MPG	Annual Fuel (12k miles)	5-Year Cost
Compact sedan	35	$1,200	$6,000
Midsize sedan	30	$1,400	$7,000
SUV/Crossover	25	$1,680	$8,400
Pickup truck	20	$2,100	$10,500
Electric	N/A	$650	$3,250

Based on $3.50/gallon average, $0.15/kWh for electric

3. Insurance (12-15% of TCO)

Factor	Impact on Premium
Vehicle value	+$200-500 per $10k value
Driver age (under 25)	+40-80%
Location (urban)	+15-30%
Credit score (poor)	+20-40%
Claims history	+25-100%

Annual insurance averages:

Vehicle Type	Annual Premium
Economy car	$1,200-$1,500
Midsize sedan	$1,400-$1,800
SUV	$1,500-$2,000
Luxury	$2,000-$3,000
Sports car	$2,200-$3,500

4. Financing (10-12% of TCO)

Loan Amount	Rate	Term	Total Interest
$30,000	5%	60 mo	$3,968
$30,000	7%	60 mo	$5,645
$30,000	5%	72 mo	$4,798
$35,000	7%	72 mo	$7,927

5. Maintenance (6-10% of TCO)

Service	Frequency	Cost
Oil change	Every 5-7k miles	$50-$100
Tires	Every 40-60k miles	$600-$1,200
Brakes	Every 40-70k miles	$300-$800
Battery	Every 3-5 years	$150-$300
Air filter	Every 15-30k miles	$25-$50
Transmission fluid	Every 60-100k miles	$150-$300

Annual maintenance averages:

Vehicle Age	Annual Maintenance
Years 1-3	$400-$700
Years 4-6	$800-$1,200
Years 7-10	$1,200-$2,000

6. Repairs (3-8% of TCO)

Vehicle Age	Annual Repair Cost
Years 1-3	$100-$300
Years 4-6	$500-$800
Years 7-10	$1,000-$2,000

Common repairs:

Repair	Typical Cost
Wheel alignment	$100-$200
Alternator	$400-$800
Starter	$300-$600
Water pump	$400-$700
AC compressor	$500-$1,200
Transmission	$2,000-$4,500

7. Registration, Taxes & Fees (4-5% of TCO)

Cost	Typical Amount
Annual registration	$100-$500 (varies by state)
Sales tax (at purchase)	5-10% of price
Title fee	$15-$50
Inspection	$15-$100 annually

TCO by Vehicle Type

Compact Car

Cost Category	5-Year Total	Monthly
Depreciation	$12,000	$200
Fuel	$6,000	$100
Insurance	$7,500	$125
Maintenance	$3,000	$50
Repairs	$1,500	$25
Financing	$3,500	$58
Registration	$1,500	$25
Total	$35,000	$583

Midsize SUV

Cost Category	5-Year Total	Monthly
Depreciation	$22,000	$367
Fuel	$9,000	$150
Insurance	$10,000	$167
Maintenance	$4,000	$67
Repairs	$2,000	$33
Financing	$6,000	$100
Registration	$2,000	$33
Total	$55,000	$917

Pickup Truck

Cost Category	5-Year Total	Monthly
Depreciation	$20,000	$333
Fuel	$12,000	$200
Insurance	$10,500	$175
Maintenance	$4,500	$75
Repairs	$2,500	$42
Financing	$7,000	$117
Registration	$2,200	$37
Total	$58,700	$978

Luxury Sedan

Cost Category	5-Year Total	Monthly
Depreciation	$35,000	$583
Fuel	$8,000	$133
Insurance	$14,000	$233
Maintenance	$6,000	$100
Repairs	$4,000	$67
Financing	$9,000	$150
Registration	$3,000	$50
Total	$79,000	$1,317

New vs. Used vs. Lease Comparison

5-Year TCO Comparison ($40k Vehicle)

Factor	New	3-Year Used	Lease (5 years)
Acquisition	$40,000	$25,000	N/A
Depreciation	$20,000	$9,000	Built into payment
Payments (60 mo)	$755	$480	$400
Down payment	$5,000	$3,000	$2,000
Total payments	$45,300	$28,800	$26,000
Maintenance	$3,500	$5,500	$2,500
Insurance	$8,500	$6,500	$9,500
Fuel	$9,000	$9,000	$9,000
5-Year Total	$51,500	$40,600	$47,000
End ownership	Yes ($20k value)	Yes ($11k value)	No
Net Cost	$31,500	$29,600	$47,000

How to Reduce Total Cost of Ownership

1. Buy Used

Strategy	Savings
2-3 year old vehicle	30-40% depreciation already absorbed
Certified Pre-Owned	Warranty + lower depreciation

2. Choose Reliable Brands

Lowest TCO Brands
Toyota
Honda
Mazda
Hyundai/Kia

3. Keep the Car Longer

Ownership Length	Cost/Mile
3 years	$0.75+
5 years	$0.55-$0.65
7 years	$0.45-$0.55
10 years	$0.35-$0.45

4. Reduce Fuel Costs

Strategy	Savings
Higher MPG vehicle	$500-$1,500/year
Hybrid	$800-$1,200/year
Electric	$1,000-$1,500/year

5. Shop Insurance Annually

Strategy	Savings
Compare quotes yearly	10-20%
Bundle policies	10-15%
Higher deductible	15-25%

Key Takeaways

The car payment isn’t the real cost — TCO is typically $800-$1,200/month for new cars
Depreciation is the biggest expense — Up to 40% of total costs
Used cars almost always cost less — Despite higher maintenance
Keep cars 7+ years for lowest cost per mile — First 3 years have steepest depreciation
Reliable brands save money long-term — Toyota, Honda have lowest repair costs
Factor ALL costs when budgeting — Don’t just consider the monthly payment

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy