Carrying Cost of a Car
"It's just a car payment" is how the number hides. Depreciation is the biggest cost and it never shows up on a bill, so the per-mile math almost always surprises people.
Depreciation is the honest number people skip: buy a car for $34,000 that is worth $21,000 in three years and you paid $13,000 to drive it, $4,300 a year, more than the insurance and the gas combined.
How the math works
- Monthly fixed = payment + insurance + parking/tolls/registration + maintenance ÷ 12 + depreciation ÷ 12.
- Monthly fuel = miles ÷ mpg × price per gallon, using your real measured mpg, not the sticker figure.
- Per mile = (fixed + fuel) ÷ miles driven. Driving more lowers the per-mile number and raises the total, which is why the low-mileage driver pays the most per mile.
- Fixed share is the part of the bill that does not care whether you drive: on a typical financed car at 900 miles a month, payment, insurance, depreciation and parking are around 90% of the cost.
- The 10-mile trip number is the one to use when someone asks you to "just drive over": the trip is not free, and the per-mile number is what it costs.
What does it really cost to own a car per mile?
At the defaults on this page, $550 payment, $180 insurance, 900 miles a month at 28 mpg and $4.10 fuel, the all-in number is about $1.41 a mile. Cut the payment and the depreciation and the same car is near 58¢ a mile, which is why "I own it outright" is the real money move.
Why is my per-mile number higher than the gas cost?
Because gas is the small line. Fuel on a 28-mpg car at 900 miles a month is about $132 of a $1,273 monthly bill, and the other $1,141 is payment, insurance, depreciation, parking and upkeep. Per-mile tools that only count fuel and tires understate the cost by two-thirds.
Is keeping an old car out the payment ever a bad idea?
It is a bad idea when repair costs pass the depreciation you are avoiding. The test is simple: add your average yearly repairs, and if that number beats the payment plus insurance premium difference on the newer car, the old car stopped saving money.