Total Cost of Ownership Car Calculator

Calculating a Car’s TCO

This calculator can be used to figure out a car’s total cost of ownership, or TCO. The calculator needs a total of ten inputs, including:

  • The units of measure the calculator should use, selecting from US Customary or Metric
  • The vehicle’s purchase price, or fair market value
  • The original value of any outstanding loans on the vehicle
  • The rate of interest paid, or finance charge, associated with the car’s loan
  • The length, or term, of the loan (stated in years)
  • The annual cost of automobile insurance
  • Annual maintenance costs associated with driving the car
  • The total miles, or kilometers, the vehicle is driven each year
  • The car’s rated fuel efficiency, stated in either miles per gallon or liters per 100 kilometers
  • The cost of fuel (gasoline, diesel, or petrol), stated in either a per gallon or liter basis

The calculator then provides the user with a total of seven outputs:

  • The annual depreciation of the vehicle, this is a five-year average based on the purchase price
  • If there is a car loan, the average annual financing charges levied by the lender
  • The annual cost of automobile insurance
  • Annual maintenance costs associated with driving the car
  • The car’s annual fuel cost, which is based on the distance driven each year and the cost of fuel on a per liter or gallon basis
  • The car’s annual total cost of ownership
  • The car’s annual total cost of ownership, stated on a per mile or per kilometer basis

The Cost of Owning a Car

While driving a car provides us with some much needed “geographic freedom” it does come at steep price. If you told a friend it costs around $50 USD to drive one hundred miles, do you think they’d believe it? Probably not, especially if they’ve never crunched the numbers and analyzed their car’s total cost of ownership. If you are interested in figuring out just how much it costs to drive a car, keep on reading.

Like many other financial analyses, the expenses associated with owning and operating a car can be broken down into two broad categories:

  • Fixed Costs: these costs don’t vary with time or the odometer readings, they’re paid regardless of how much the car is driven. Examples of these costs include a loan’s financing charges, insurance, depreciation, and some maintenance items such a car’s battery.
  • Variable Costs: these costs increase the more a car is driven. Examples of these costs include fuel, and some maintenance items such as tires and brakes.

Our calculator allows for scenarios involving a car loan, if you want to model the finance charges associated with the loan. The calculator also presents the results two ways – the total cost of ownership per year as well as cost per mile or kilometer.

Known and Unknown Costs

Some of the costs you can model are well known. For example, you can look at the car’s odometer to understand how much distance is driven each year. If you finance the car, the loan details should be well known too. Car insurance is also a variable that is easy to quantify. Fuel cost may vary over time but are well known as is the fuel efficiency of the vehicle.

Unless the car is still under warranty, annual maintenance requires a bit of guesswork. Thankfully, we do have some guidance from organizations such as the American Automobile Association (AAA) which tells us maintenance will average around 1,000 USD per year over the life of the vehicle. In fact, if you’ve never owned a car before, AAA also tells us insurance averages around 1,200 USD per year.

Interpreting the Results of this Calculator

There really is no benchmark for a car’s total cost of ownership. It will increase sharply with the cost of the car and if a loan is used to pay for the vehicle. In terms of the cost per mile or kilometer, the most significant variable is distance miles driven. Since a lot of costs are fixed, the more miles or kilometers driven the lower the cost per mile or kilometer. The relationship is true because the car’s fixed costs can be spread over more miles or kilometers.