The true cost of car ownership

The American Automobile Association (AAA) says that, on average, it costs 52.2 cents to drive one mile. To drive a Ford Focus like mine 20,000 miles per year, the average cost is 37.6 cents per mile.

How close are the AAA estimates? I ran some numbers.

Based on the purchase price of my vehicle ($16,500), the interest paid ($1,300), and the number of miles on the odometer (81,762 in 66 months), I calculated that for the past year my average cost per mile is $0.2170 over 20,274 miles. But that's only for the car itself. I've also accumulated the following operating expenses:

  • Fuel: $1,646.37 ($0.0812 per mile)
  • Insurance: $762.93 ($0.0376 per mile)
  • Service: $507.07 ($0.0250 per mile)

My total cost-of-ownership per mile is 36.1 cents, which is not far from the AAA estimate of 37.6 cents. My total cost to run the Focus for the past year was $7,514, which is about 5% less than the national $7,967 annual average cost-of-ownership.

I encourage you to run numbers for your car. It's easy and enlightening. After calculating your current automobile costs, you can explore “what if?” scenarios. For example, how much do rising gas prices affect your costs?

My Ford Focus gets roughly 310 miles on eleven gallons of fuel, for an average of 28.2 mpg. If fuel is at $3.00/gallon instead of $2.00/gallon, I'm paying 10.3% more — $725/year — to run my car.

How much does it affect your cost-per-mile to choose a luxury car instead of something practical? I recently found myself fighting the new car itch. I wanted a new BMW or Audi. A commenter wrote:

In The Millionaire Next Door, one of the best-performing groups in terms of net worth was what the authors called something like “used car prone”. This class of person buys a car that is 3 to 5 years old, and drives it for many years. The authors spend a lot of time discussing this class because it is statistically most likely to have a very high net worth compared to annual income.

If I were driving a new BMW 325i, my total cost of operation would be 60.1 cents per mile, a 68.8% increase over the cost with my Ford Focus.

Examine your driving habits in relation to how much it costs to run your vehicle. For example, driving seven miles into Portland and seven miles home costs me about five bucks. Now the trip to my favorite cheap taco place doesn't seem so cheap any more.

If I drive 38.6 miles to work and back every day, I spend one hour and $13.93 for the privilege. (When I lived closer to work, my 11.4 mile round-trip cost me twenty minutes and $4.11.) My wife and I plan to drive from Portland to San Francisco for a week-long vacation this summer. We will log about 1200 miles, which will cost me $425. (According to Travelocity, round-trip airfare for two would run $442, so this is basically a wash.)

For more information on the cost of automobile ownership, read the AAA driving cost study for 2006.

More about...Transportation

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josh_parris
josh_parris
14 years ago

You’ve forgotten the resale/total loss value of your vehicle. I bet you can’t sell your 5 year old Focus with 80K on the clock for $17,800, but let’s say you can get $8,000 for it. That means you’ve lost $8,500 in depreciation, plus $1,300 in interest – $9,800 opportunity cost over 80K -> close enough to $0.12 / mile (much better than $0.2170 a mile). Of course, the older a depreciating asset like a car gets, the slower the dollar value drops, so things should only get better from here on in.

Peter
Peter
14 years ago

The other thing you’re not considering is that most of your costs are fixed. The purchase price of the car, the insurance and a lot of the maintenance are the same even if it sits in the driveway all day. Fuel is really the big variable as your miles driven changes. If you only drive the car 100 miles per year, your total cost per mile would be astronomical.

VinTek
VinTek
14 years ago

While it’s entirely true that if you drove only 100 miles/year, your cost/mile would be high. Most costs of ownership in a car are to some degree variable. For example, if I drove a low number of miles per year, my insurance premium would be lower. Oil changes would slow down to once every six months (or even once a year) just to rid the car of sediment. Even depreciation to some degree would slow down, as a low-mileage car is worth more than a high-mileage car. Frankly, there is a point where not owning a car and renting one… Read more »

John Wagnitz
John Wagnitz
14 years ago

I guess that means I can go out and by that J.P. Weigle ranndoneur bicycle I’ve been dreaming about for the last year. it runs about $7,00 fully loaded. You see, I caught onto the big lie that we need automobiles to survive and, other than the occasional rental car, I pay NOTHING for auto expenses. 99% of my trips are by bicycle, 1% by mass transit, I pay nothing for health clubs since I average about 170 miles per week in cycling. There are also the larger environmental and societal costs of car ownership not factored into your figures.… Read more »

Curtis
Curtis
8 years ago
Reply to  John Wagnitz

Great if everyone did it. Not so great if you’re one of the few. Bicycles and cars do not belong on the same roadways. If that’s what you’re recommending, better count on being hospitalized at least once during your years of saving commute dollars. My neighbor was killed commuting home from work on his bicycle – he got hit and run over by a sudden right-turner. It took him a month to die. I have given up riding on major thoroughfares – being in the right does not protect you.

Will
Will
8 years ago
Reply to  Curtis

What rubbish!

While high quality cycle lanes would be nice, claiming that it is too dangerous to share the road with cars is nonsense. It’s fashionable to paint cycling as dangerous but the facts don’t bear this out – it’s actually safer per mile travelled than being a pedestrian!

It even compares favourably with driving once you take in to account the fitness benefits; cycling increases your life expectancy overall.

Save money, be healthier, live longer. Win, Win, Win.

MPH
MPH
6 years ago
Reply to  Will

I doubt it is safer per mile travelled than walking. Recent data (2011) shows that 677 bikers were killed and 4,432 pedestrians were killed in vehicle accidents for the year. But nobody really knows how many miles people are riding or walking per year. But one thing that is certain, EVERYONE is a pedestrian for some amount of time every time they leave their home. Walk in from the car to the store, you’re a pedestrian. Walk out to your mailbox, you’re a pedestrian. All 310,000,000 of us are in the pedestrian risk pool every time we walk outside. Bikers… Read more »

bjohns
bjohns
8 years ago
Reply to  John Wagnitz

Good idea if we were all city dwellers as I suspect you are. Unfortunately, if the large portion of our population that still lives in the rural areas moved into the cities the streets might get a bit crowded with all the additional bicycles, not to mention the fact that there would be no one left to grow your food, or mine the coal to burn in the power plants that power your cities and charge your ipods.

MPH
MPH
6 years ago
Reply to  John Wagnitz

I know it’s been a while since the original post was made, but the poster hasn’t considered that this isn’t practical everywhere and all the time. For example, a 2 mile bicycle commute in Marquette MI this last winter (2014) would probable have been fatal several times just due to the effects of cold. When the wind chill is -70, if you’re wearing enough to keep you alive, I’d bet you couldn’t ride a bike. Then there’s the impracticality of trying to ride to work with several inches of snow on the road/sidewalk. It’s a great idea in the places… Read more »

ginna
ginna
1 year ago
Reply to  John Wagnitz

Rock on! Me too. I switched to car-free 9 years ago and haven’t looked back.

Worst case (like distance or moving furniture), I take a Lyft or get a rental car. I spend maybe $500 on this including vacation. My bike costs this year were ~$500 (because I needed to buy a bike…), so max $1k / year transportation. Compared to $7900 I’m doing pretty great.

T
T
1 year ago
Reply to  ginna

Great if you live in NYC or somewhere warm. Try to do that in the winter region and see how your life is going to be.

Rick
Rick
13 years ago

Watch out with your Ford Focus. At 80K miles or so they have a tendency to throw a piston. You’ll need a complete rebuild.

Robin
Robin
13 years ago

I’ve kept a spreadsheet since I bought my 99 Jeep Cherokee. Including the initial purchase price, maintenance, insurance, fuel, and taxes, I calculate the cost has been 37c per mile.

Alice
Alice
13 years ago

I use my own car to make deliverys for work. I get reimbured for gas and tolls only. SHould I be getting per mile cost as well?
In 2 months I’ve gone 2400 miles for work. How much should that be?

Ron
Ron
8 years ago
Reply to  Alice

Yes! I would never drive my car for an employer without getting what the IRS allows them to deduct for my miles. Currently 55 cents per mile. Anything less and you are not getting reimbursed for all the things they talk about in this article. Think of it this way. If you drove for them over your career for 40,000 miles. You would have worn out a set of tires (not to mention everything else you wore out) and you would have paid for it yourself. I am a small business owner and I pay my employees whatever rate the… Read more »

gary miller
gary miller
13 years ago

I teach a class called Financial Independence for Women at Saddleback College in Mission Viejo, CA. Am going to recommend your excellent analysis on total car costs-this is one of those stealth cost items that can sabotage a person’s financial goals . If you know of a web site or study that shows depreciation curves or table for a variety of new cars, would love to know about this, as I’m a big believer in buying after a car is about two years old to avoid the “drive off the lot” price collapse.
Thanks for your excellent work!

walk0080
walk0080
12 years ago

Re: Commend #1.
I think the author’s car is a 2000 Ford Focus… he would be lucky to sell it for $4,500… very poor resale – I should know, I own one myself (2000 Focus ZX3). :-/

Although I have not done the calculations myself, I do keep the cost/mile in mind when using the car. If it’s probably cheaper by transit, I take the bus/subway. If it’s more convenient or significantly faster than transit, I drive.

Alex
Alex
12 years ago

My previous car was an 1987 Audi 5000S Wagon, which I bought in 2006 for $875. I sold it in 2007 for $800. Taxes and liability insurance ran at about $300/year. I also had to pay about $400 during that year for repairs. It did about 17-18 mpg in the city. I drove about 300 miles in 2 weeks. I think it beat all other cars I knew in terms of cost of driving a mile. The author is missing one important thing in his/her economic analysis: the psychological cost of NOT owning a car. If people keep buying new,… Read more »

Brad
Brad
12 years ago

Drive the car to San Fran. Your costs included fixed and variable costs but you’re still paying the interest and insurance and taxes either way… A 7 year old car with 80,000 or 81,200 miles on it is worth basically the same amount. The true cost is really gas, 1/3rd the cost of an oil change, 1/30th the cost of a new set of tires and a few pennies for misc. repairs per mi. The best way to get your cost per mi. down is to drive it more miles.

Greg
Greg
12 years ago

Great article. The biking comment would not work for most in Texas. I drive 62 miles round trip from work in a state where the weather changes hourly on some days. Im glad that you can boast about biking it, but take the seat out of your ass and realize that this is not a possibility for all. If you want to get a low cost of operations, buy a used Corolla or Civic and drive it until it rusts away. Personally I would rather pay for the enjoyment of driving my car and for the peace of mind that… Read more »

ruth pennoyer
ruth pennoyer
12 years ago

I do not see where the actual cost of the car spread over 5 years (60 months) is factored into these cost per mile or cost per year figures. I do see the finance charges.

What am I missing?

Kate Kamper
Kate Kamper
12 years ago

Worried about resale, don’t sell it, drive the wheels off, and worried about finance charges, don’t finance it, buy it out right, there are many things you can do to drop these prices significantly.Our 2000 Dodge stratus costs us less every day, its been paid off for years, the insurance is liablilty only and even that goes down every 6 months. The very thought of replacing it when the wheels still move is just unthinkable, even with all he scratches dings and dents. Yeah our neighbors are trading up fast and furiously… but we don’t care. Its all but FREE!… Read more »

Tpr76
Tpr76
12 years ago

Great article! Ive never done the math on the cost of car ownership but my ex-GF (whom Im still good friends with) found out the hard way how costs go up sharply once you move from a budget car to a luxury brand. After going from an econocar to a BMW 3-Series her maintenance, insurance, and fuel cost increased exponentially but because she loves it so much she refuses to get rid of it. I’m very very fortunate in having a work car that I get to drive for personal use. No fuel, insurance, or maintanence costs and I even… Read more »

RossABQ
RossABQ
11 years ago

I’ve tracked all of my cars to answer the question of true cost of ownership, comparing relatively new cars vs sub-$1,000 cars with high mileage. I do all my repairs myself, and I might add, I make all repairs required (people who swear they haven’t put in a penny’s worth of maintenance are rolling the dice, with their safety and the longevity of the car. The most cost effective cars (at the gas prices in effect when I owned them) were the perennial bad-boys, rear-wheel drive V8 American cars, purchased with about 50-60k miles. Parts are cheap when needed, value… Read more »

Stephane Thierry
Stephane Thierry
8 years ago
Reply to  RossABQ

Not necessarly true.
I’m driving a ’99 BMW m3 convertible that I bought 3 years ago. KBB value indicated a drop of $800 for value for the 3 years owned.
I’m driving an amount of 10kmiles a year.
I do the maintenance myself.
The car cost me (including depreciation, maintenance, gas (ok..25mpg..), insurance, parts…) $4100 a year – much less than what a new chevvy econo-box would cost me…

Gary
Gary
11 years ago

The statement below doesn’t add up My Ford Focus gets roughly 310 miles on eleven gallons of fuel, for an average of 28.2 mpg. If fuel is at $3.00/gallon instead of $2.00/gallon, I’m paying 10.3% more – $725/year – to run my car. * Fuel: $1,646.37 ($0.0812 per mile) * Insurance: $762.93 ($0.0376 per mile) * Service: $507.07 ($0.0250 per mile) If your fuel cost is 1,646.37 10% more is an additional 164.63 you say $725? If your currently paying $2.00 and the price goes 3.00 per gallon. That would be a 50% increase in fuel cost per year or… Read more »

The 2008 AAA Driving cost study
The 2008 AAA Driving cost study
11 years ago

The links in the original article no longer work. This one does!

http://www.aaaexchange.com/Main/Default.asp?CategoryID=16&SubCategoryID=76&ContentID=353

Drew
Drew
11 years ago

1) as for your trip to SF the number 36.1 is misleading b/c the Insurance and the total costs (+interest) are fixed. Therefor the cost/mile is much lower ~$0.11/mile. It would be much cheaper to drive! 2) The AAA number does not include the total cost of the car. It is only the interest that you are paying on the downpayment. So actually your cost is much lower than the EPA your cost should then be ~$.16/mile. Much cheaper than the AAA value! This number of is very misleading… Most of * Fuel: $1,646.37 ($0.0812 per mile) * Insurance: $762.93… Read more »

Roger
Roger
10 years ago

Re: Biking vs Driving I agree biking is not possible for all, but living closer to work is often not even considered. For those who live close enough to work to bike, most consider it to be far more difficult (or impossible) or dangerous than it really is, if they consider it at all. Something like 80% of all car trips are less than 2 miles. In some cases we still save time by driving, but the necessity of such time-slicing is brought on by our tendency to overcommit ourselves and our kids. I own cars but bike to work… Read more »

Alex
Alex
6 years ago
Reply to  Roger

Where we live (Houston suburbs), you have to drive almost everywhere. And if you have kids, the only place you can walk or bike to is the neighborhood playground. My commute is 11 miles one way on very busy streets – I would not want to ride a bike, especially not in Houston heat. I recently bought a used 2008 Mazda 3 for $9200 and am enjoying the infrequent fill-ups of 10 gallons each. I don’t care what my costs per mile are – I know I am not spending a lot on the car and I absolutely need a… Read more »

MilnairNxtDoor
MilnairNxtDoor
10 years ago

What I would really like to find is a source of maintenance cost averages for cars more than say 5 yrs old. Edmunds.com has a great true-cost-to-own tool, but it only goes back to 2004 or 2005. I’m looking at some 2001 models and am curious. I know people here have bashed BMW but I was looking at a large sampling of prices sorted by odo mileage and found that once they get past 100k mi. they go down in price very very slowly. Basically, advert. prices for a 100k example 3-series AWD (the AWD is why I’m looking to… Read more »

Dustin LaBarge
Dustin LaBarge
10 years ago

I drive a 1991 Honda Accord (2.2L 4cyl 5-spd manual), which gets about 30 city / 34 highway miles per gallon. It has 265,000 miles on it, so the registration costs about 15 dollars per year, and insurance costs about $250/year. I paid $1 for the vehicle. I heard someone say something the other day that betrays a critical viewpoint upon our vehicles which way too many people hold. The man said to consider a vehicle as something which gets you from point A to point B, NOT as an investment. Financial decisions are not so easy to qualify as… Read more »

Kenny
Kenny
10 years ago

Guys, I believe in doing this computation and based on variables that change over the life of the car, I computed it using a Car Cost model that I have built and refined over the years. So, based on my brother buying a Ford Windstar in 07/1996 with 4 miles on it and selling it around 120K miles, I computed all elements of it including the fluctuations in gas prices (99c per gallon to $4 per gallon) as well as maintenance, insurance etc (ALL elements) and I came to $0.35 per mile. I have the same identical van also (bought… Read more »

bjohns
bjohns
8 years ago
Reply to  Kenny

It would be great if we could all walk to work but the problem that some people don’t understand is that every ounce of sustenance any animal, including man, requires comes from the land. Do the cities have enough coal, water, timber, oil, flora, or fauna to sustain all of the residents? The answer is clearly no. Until they do, people will be required to live and work in remote places to subsidize the harvesting of resources for the city dwellers. Urbanites like to think they are doing good for the world when they walk to work but they forget… Read more »

Jim
Jim
10 years ago

I drive a 2003 Mercury Sable that I purchased new with no money down and 0% interest for a 5 year note. It has 200,000 miles on it. I have been pondering buying another car but am hesitating because I really like the Merc and it is paid for. I did some rough calculations and have come up with .30 to .35 cents per mile including every expense I could think of including depreciation, insurance, repairs, fuel cost,license fees, regular maintenance, etc. I cannot justify the expense of a new car except for the desire factor. It is nice to… Read more »

Tom
Tom
10 years ago

I bought a 2002 PT Cruiser in may of ’05 with 52,000 on it. Paid $9,000. The first three years I kept track of every penny spent. After that I estimated – with pretty good figures to go on. It’s cost me .29 per mile. I had no finance charges since I paid cash. I wonder though – should I count what I would have earned on the 9,000 had I invested it? Well, I guess not because then I would have had to finance the car – at a higher rate. So I’m happy with 29 cents per mile.… Read more »

Steven
Steven
10 years ago

You need to learn the difference between variable cost and overhead cost, and apparently the AAA does too.

This provides a false idea of the cost to drive.

Doug
Doug
9 years ago

But you will be driving a Ford Focus! And the hours you spend in that car you will never get back. Thank-you for showing me in black and white why driving a BMW is such an incredible bargain.

Tim Thompson
Tim Thompson
7 years ago

Depreciation is a huge factor in why I only buy used vehicles. I’m paying like 3.75 per gallon right now, so needless to say I only drive places I absolutely have to.

António Lourenço
António Lourenço
3 years ago

The average British for example spends totally with its car around 70£ per week, 280£ per month and 3400£ per year, just for its automobile. These costs are insurance, fuel, vehicle inspection, vehicle excise duty, car finance, depreciation, maintenance, repairs and improvements, parking, tolls, traffic tickets and washing. This total cost might reach 500£ per month but most people disregard it because they pay such expenditures during different periods within the year.
source: autocosts.info

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