How to calculate the real monthly cost of owning a car

Car costs come in different rhythms: monthly payments, weekly fuel, annual insurance and tax, occasional repairs and invisible depreciation. Looking only at the monthly payment hides most of the true cost.

1. Monthly loan or lease payment.
2. Fuel or charging: average monthly distance × consumption × price.
3. Insurance: annual premium ÷ 12.
4. Tax, registration and inspection: annual total ÷ 12.
5. Parking, tolls and charges.
6. Maintenance and tyres: annual estimate ÷ 12.
7. Repair reserve: monthly amount based on age and model.
8. Depreciation: (purchase price − expected resale value) ÷ months of ownership.
9. Add them all — this is your true monthly cost.

• Pay maintenance and repair amounts into a car sinking fund monthly.
• Recalculate when fuel prices or insurance change.
• Compare total cost, not payment, when replacing a car.
• Track actual costs for a year to refine estimates.

• A spreadsheet or car cost calculator.
• Insurance quote comparison.
• Fuel-economy data for the model.

• The payment is only part of the cost.
• Convert annual costs into monthly amounts.
• Include depreciation and a repair reserve.
• Compare total cost when choosing a car.