Car Cost Calculator

Compare buying different cars versus investing the money instead.

Default example and how to estimate costs

In the US, the default example uses a 5-year horizon with a cash purchase to highlight recurring costs and depreciation.

Insurance: a reasonable starting point is roughly 3% to 6% of the car price per year. Maintenance often lands around 1% to 2% per year.

Fuel can be estimated from annual miles and average MPG. Depreciation is commonly 10% to 15% per year in the first years.

If you finance, use your actual APR and down payment to reflect the credit cost.

Cost mode

Ownership period (years)

Yearly cost without a car (public transit/uber)

Investment annual return (%)

Car name

Purchase type

Car price

Insurance (year)

Maintenance (year)

Fuel (year)

Registration + taxes (year)

Depreciation (% per year)

Results

Compact sedan

Avg. yearly cost

$4,800.00

Total cash outflow

$50,000.00

Car value at end

$19,081.50

Net cost

$30,918.50

Value if invested instead

$38,202.53

Opportunity cost

$19,121.03

Net worth over time

Cost Guide & Methodology

This calculator helps you understand the true financial impact of owning a vehicle by comparing it to the opportunity cost of investing that money.

1. Visible vs Hidden Costs

Beyond loan payments and fuel, consider insurance, maintenance, taxes/registration, and — the largest of all — depreciation. Vehicles are depreciating assets.

2. The Weight of Opportunity Cost

The "Opportunity Cost" shows how much wealth you would have created by investing the car's down payment and monthly expenses. The gap between this invested amount and the car's resale value at the end of the period is the true cost to your net worth.

3. Interpreting the Chart

The chart displays the vehicle's residual value (which drops due to depreciation) against the compound interest curve of an equivalent investment (which grows). The ever-widening gap between the two lines represents the wealth surrendered by purchasing the car versus investing the money and using ride-sharing.

Benchmarks

Depreciation: A general rule of thumb is a 20% loss in the first year, and around 10-15% in the following years. Some popular models hold their value better.
The 10% Rule: Financial experts often recommend that total transportation costs should not exceed 10% to 15% of your monthly gross income.

Common Pitfalls

Ignoring Time Value of Money: Spending $50k in cash on a depreciating asset immediately eliminates its ability to earn ~7% annualized returns in the market long-term.
Long Financing Terms: Terms stretching beyond 60 months disguise high APR rates and frequently leave you underwater (owing more than the car's current worth).

Mathematics

Resale Value (Annual Depreciation)

V_n = P(1 - d)ⁿ

Opportunity Cost

OC = IV_n - V_n

Variable Legend

V_n = Car Value at Year n
P = Purchase Price
d = Depreciation Rate
OC = Opportunity Cost
IV_n = Invested Value at Year n

Suggested

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Consumption Cost vs Investing

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Compound Interest

Project future value or solve the required rate to hit a target.

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