Comprehensive Guide
Learn more in our Loans & Mortgage Guide.
How it works
True cost per mile is the single all-in figure a car really charges you for every mile driven — total cost of ownership divided by total miles over the period you will keep it. It exists because car costs hide in separate ledgers: depreciation never appears on a bill, insurance arrives monthly, fuel arrives weekly, and maintenance arrives inconveniently, so almost everyone mentally prices their car at the payment alone. The honest arithmetic says otherwise. On the defaults — a $34,000 car depreciating to $17,000 across five years, with $4,300 of annual running costs and 12,000 miles — the all-in figure lands near 64¢ a mile and about $640 a month, with depreciation contributing over 44% of the total despite being invisible. The calculator spreads depreciation straight-line for comparability, which flatters early years: real first-year losses run steeper, so selling early costs more per mile than shown, while holding longer dilutes the fixed costs. Two exclusions keep the number conservative and comparable: financing interest and the opportunity cost of capital tied up in the car. Use the figure where it changes decisions — comparing commute options, judging rideshare against ownership, or testing whether the nicer trim is worth its marginal pennies per mile.Formula
Cost/mile = (purchase − resale + running×years) ÷ (annual miles × years)
Tips
- Depreciation is usually the biggest line — never price a car by its payment alone.
- Drive fewer miles and fixed depreciation spreads thinner: per-mile falls as usage rises.
- Add loan interest separately for a fully loaded figure; this tool stays cash-basis.
- Re-run with resale at salvage levels — keeping to 200k miles slashes per-mile cost.
- Compare against rideshare-per-mile before concluding ownership is obviously cheaper.
Frequently asked questions
What is the true cost per mile of owning a car?
For the default profile — $34,000 purchase, $17,000 resale after five years, $4,300 yearly running costs at 12,000 miles — about 64¢ per mile, or $640 monthly. AAA-style averages land between 60 and 90 cents depending on vehicle class, with depreciation consistently the largest slice.
How much of car ownership cost is depreciation?
Typically 40–50%. In this example depreciation contributes $17,000 of a $38,500 total — about 44% — more than fuel, maintenance and insurance combined in many cases. It dominates because it is silent: no invoice ever says 'depreciation', so owners systematically underestimate it.
Does driving more really lower my cost per mile?
Yes, mechanically. Fixed depreciation divides across more miles: the same car at 18,000 annual miles costs roughly 47¢ per mile versus 64¢ at 12,000. Running costs stay broadly proportional, so utilization is the lever — which is also why low-mileage ownership is the expensive kind.
Why doesn't the per-mile figure include financing interest?
To keep comparisons cash-basis and apples-to-apples: a cash buyer and a financed buyer own identical per-mile depreciation and running costs. Add your actual interest separately — roughly rate times average balance spread across miles — if you want the fully loaded personal number rather than the comparable one.
Is a cheaper car always cheaper per mile?
Not automatically. A $15,000 car losing $7,000 over five years with $3,800 of running costs runs about 45¢ a mile; a thrifty used flagship can approach that. Cheap purchase prices often pair with faster percentage depreciation and higher maintenance — run both through the calculator before trusting intuition.