Two cars are on the shortlist and the sticker prices are close, but before deciding you want the full annual running cost picture, not just the purchase price.
True Cost of Car Ownership Calculator
Vehicle Ownership
Depreciation = Purchase price × annual depreciation %
Fuel cost = (Annual km ÷ 100) × consumption (L/100km) × fuel price
Total annual = Depreciation + Insurance + Maintenance + Fuel
Depreciation is usually the single largest cost of car ownership, yet it's the one most owners never actually calculate since no bill arrives for it.
Reference: Standard total cost of ownership (TCO) method used in vehicle finance and fleet management
Estimate only for household planning purposes. Not financial advice — verify against actual bills, quotes and your own financial circumstances, and consult a financial adviser for significant decisions.
1 What this calculator does
Calculates the true total annual cost of owning a car by combining depreciation, insurance, maintenance and fuel costs into a single figure, plus a cost-per-kilometre breakdown. Depreciation in particular is almost always the largest but least visible cost of car ownership, since it never appears as an actual bill.
2 Formula & professional reasoning
Depreciation cost = Purchase price x (Annual depreciation % / 100)
Fuel cost = (Annual km / 100) x Fuel consumption (L/100km) x Fuel price per litre
Total annual cost = Depreciation + Insurance + Maintenance + Fuel
Cost per km = Total annual cost / Annual km
Most people significantly underestimate car ownership costs because depreciation — typically the single largest cost component — never generates an actual bill or bank transaction, unlike insurance, fuel and maintenance which are all directly visible. A car depreciating at 15% annually on a $32,000 purchase loses roughly $4,800 in value in the first year alone, a real economic cost even though no invoice ever arrives for it. Adding all four cost components together, and expressing the total as a cost-per-kilometre figure, gives a genuinely complete picture — useful for comparing vehicles, deciding whether to keep an existing car versus replace it, or comparing driving against alternatives like public transport.
3 Worked examples
⚠️ Illustrative example only — not clinical or professional instruction.
Basic
Small economical car, low annual distance
Given: Purchase $22,000, depreciation 12%, insurance $900/yr, maintenance $600/yr, 8,000km/yr, 6.0L/100km, fuel $1.90/L
Working:
Deprec = 22000x0.12=$2,640 | Fuel = (8000/100)x6.0x1.90=$912 | Total = 2640+900+600+912 = $5,052Answer: $5,052/year ($0.63/km)
💡 A smaller, efficient car with lower annual distance keeps total ownership cost relatively contained, dominated here by depreciation and insurance rather than fuel.
Standard
Mid-size car, typical commuter distance
Given: Purchase $32,000, depreciation 15%, insurance $1,400/yr, maintenance $900/yr, 14,000km/yr, 7.5L/100km, fuel $1.95/L
Working:
Deprec = 32000x0.15=$4,800 | Fuel = (14000/100)x7.5x1.95=$2,048 | Total = 4800+1400+900+2048 = $9,148Answer: $9,148/year ($0.65/km)
💡 Depreciation alone exceeds fuel cost here, which surprises many owners who focus budgeting attention primarily on the fuel bill.
Advanced
Larger vehicle, high annual distance
Given: Purchase $55,000, depreciation 18%, insurance $2,200/yr, maintenance $1,600/yr, 25,000km/yr, 10.5L/100km, fuel $1.95/L
Working:
Deprec = 55000x0.18=$9,900 | Fuel = (25000/100)x10.5x1.95=$5,119 | Total = 9900+2200+1600+5119 = $18,819Answer: $18,819/year ($0.75/km)
💡 At this combination of purchase price, depreciation rate and distance, total ownership cost approaches $19,000/year — a figure worth weighing seriously against alternatives if the vehicle isn't strictly necessary for work or family needs.
4 Sanity check
Typical annual depreciation rates
New cars: 15-20% in the first year, moderating in later years | Used cars (2-5 years old): typically 8-15%/year | Luxury/performance vehicles often depreciate faster than mainstream models
Depreciation rate isn't constant over a car's life — it's usually steepest in the first 1-3 years
Depreciation is usually the largest single cost
For a typical new car, depreciation frequently exceeds fuel, insurance and maintenance combined, especially in the first few years of ownership
If your calculated depreciation figure seems small relative to fuel/insurance, double-check the percentage entered is realistic for the vehicle's age and type
Cost per km comparison
$0.50-0.80/km total ownership cost is a common range for typical mainstream vehicles — significantly outside this range is worth double-checking the inputs
This cost-per-km figure is useful for comparing against public transport, rideshare, or a smaller/cheaper vehicle for the same annual distance
Fuel cost only, not registration/roadworthy/tolls
This calculator's four categories don't include vehicle registration, roadworthy/inspection fees, tolls or parking — add these separately for a fully complete picture if they're significant in your situation
5 Common errors
| Error | Cause | Consequence | Fix |
|---|---|---|---|
| Ignoring depreciation entirely | Budgeting only for the visible costs (fuel, insurance, maintenance) and treating the purchase price as a one-off sunk cost with no ongoing implication | Massively understates the true annual cost of car ownership, since depreciation is typically the largest single component | Always include a realistic depreciation percentage — even though no bill arrives for it, it's a genuine ongoing economic cost of ownership |
| Using an unrealistic depreciation percentage | Assuming a very low depreciation rate (e.g. 2-3%) without basis, or using a rate appropriate for a different vehicle type/age | Understates true ownership cost if the assumed rate is too optimistic | Research typical depreciation rates for the specific make, model and age of vehicle — some vehicles hold value notably better or worse than the general average |
| Not including registration, tolls or parking in a full budget | Treating this calculator's four categories as the complete cost of car ownership | Registration, roadworthy/inspection fees, tolls and regular parking costs can add a meaningful amount beyond these four categories | Add registration, inspection fees, tolls and regular parking costs as additional line items if a fully complete picture (not just the four core TCO categories) is needed |
| Comparing purchase price alone when choosing between vehicles | Choosing a cheaper car based on purchase price without comparing total annual ownership cost, including fuel efficiency and depreciation differences | A cheaper purchase price doesn't always mean a cheaper total cost of ownership if the vehicle has poor fuel efficiency or depreciates faster | Calculate and compare total annual ownership cost (this calculator's full output) for each vehicle being considered, not just the upfront purchase price |
6 Reference & regulatory links
7 Professional workflow
Common tools used alongside this one:
Car vs Public Transport Cost Comparison
Compare this true car cost against public transport for the same commute
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Household Budget Planner
Fit true annual car ownership cost into the household budget as a needs-category expense
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