Total cost of car ownership
The purchase price is the start, not the whole cost. This adds depreciation, fuel, insurance, road tax, servicing and MOT over the years you keep the car, then breaks it down per month and per mile.
Where the money actually goes
Running a car is a stack of costs, and the loudest one, fuel, is rarely the biggest. For most cars kept a few years, depreciation is the largest single item, because the value falls fastest while the car is worth most. Insurance, servicing, road tax and the MOT sit on top, small each year but real across the ownership period. Adding them together and dividing by the years, and by the miles, turns a vague sense of expense into two numbers you can compare between cars or against not owning one at all.
The breakdown
| Cost | Total over 3 years |
|---|---|
| Depreciation | £11,216 |
| Fuel or charging | £3,055 |
| Insurance | £2,100 |
| Road tax (VED) | £585 |
| Servicing | £900 |
| MOT | £165 |
| Total | £18,021 |
Worked example
A £25,000 car kept 3 years, driven 8,000 miles a year at 50 MPG, loses £11,216 in value and burns £3,055 of fuel. Add £2,100 insurance, £585 road tax, £900 servicing and £165 of MOTs, and the 3 years cost £18,021. That is £501 a month, or £0.75 for every mile driven. Depreciation is the biggest slice, which is why buying slightly used often saves the most.
Common questions
What is the true cost of owning a car?
It is far more than the purchase price. Over the years you own it, a car loses value (depreciation), burns fuel or electricity, and needs insurance, road tax, servicing and an MOT. Depreciation is usually the single biggest item, often larger than fuel, yet it never arrives as a bill.
Why include depreciation if I have not sold the car?
Because the value is falling whether you sell or not. When you eventually replace the car, you get back only what it is then worth, so the drop is a real cost you have already borne. Counting it per year is the only honest way to compare cars.
What mileage and MPG should I enter?
Use your own annual mileage and your real MPG, not the official figure. Most drivers cover 6,000 to 10,000 miles a year, and real economy runs below the brochure number. Getting these right matters most for a high-mileage car, where fuel rivals depreciation.
Does an electric car change the sums?
Yes. An EV replaces the fuel line with charging, which is usually cheaper per mile at home, and road tax and servicing tend to be lower, though insurance can be higher. Enter your charging cost in the fuel box as an equivalent, or use the EV vs petrol tool for a precise per-mile figure.
What does cost per mile tell me?
It spreads every cost across the miles you drive, so you can see what each journey really costs to run. A low-mileage driver often finds depreciation and insurance dominate, making the per-mile figure high even with a frugal car.