Why the Monthly Payment Tells You Almost Nothing
The monthly loan payment is only one of several fixed costs. Depreciation, the largest single component of per-mile cost, never appears on a bill at all.
The U.S. Department of Energy puts the average cost of driving a car at about $0.58 a mile. That breaks down into fuel at roughly $0.17, insurance near $0.11, maintenance around $0.08, and depreciation at close to $0.18, with a small remainder covering registration and odds and ends. Depreciation is bigger than fuel, the opposite of what a fuel receipt suggests.
Two kinds of spending stack together. Fixed costs (insurance, registration, the loan payment, a parking spot) keep charging whether the car moves or not. Variable costs (fuel or charging, tires, oil, maintenance, repairs, and depreciation) climb directly with mileage. Because fixed costs keep running, the cost never drops to zero even when the car sits parked. Fuel-only estimates undersell ownership for that reason: they capture the most visible variable cost and skip the categories that never appear at the pump.
Charging costs are not interchangeable with gasoline. Electricity prices vary by time of day and location, and home charging off-peak usually costs less per mile than a public fast charger, so the fuel line does not transfer unchanged to an electric car.
Depreciation behaves like a variable cost in practice, tracking mileage and condition, yet it stays invisible in monthly budgeting. A car that holds its value well can cost less per mile to run than a more fuel-efficient one that does not, which is why two households with identical loan payments can carry very different transportation budgets.
Totaling a Year of Ownership
Pick a twelve-month window and add every category: depreciation, fuel or charging, insurance, maintenance and repairs, tires, registration or other fees, plus the loan payment and parking if you finance the car or pay to park it. Depreciation is the one people skip, because it is paid at sale or trade-in rather than monthly. Track it directly as the difference between what the car was worth at the start of the year and what it is worth now.
Annual and lump-sum costs belong in the same total. Insurance may be paid twice a year, registration renews once, and a set of tires lands in a single month.
Edmunds' True Cost to Own is one published tool that bundles costs buyers may not have included when comparing vehicles. Whichever worksheet you use has to carry depreciation, since that line alone can decide which of two cars is cheaper to run. The six lines matter more than the brand of the tool: a vehicle that is cheap at the pump and expensive to insure, or cheap to insure and quick to depreciate, will not rank the same way once all of them sit in one column. Build the total once and reuse it. The annual figure moves slowly, and the per-mile number built from it moves only with your odometer.
From Annual Total to Cost per Mile and per Trip
The formula is short: add fuel, insurance, maintenance, depreciation, and registration for the year, plus the loan payment and any parking, then divide by miles driven. A car that costs $6,200 in running costs across 12,000 miles works out to about $0.52 per mile before any loan payment.
That single number converts into trip costs quickly. At $0.55 a mile, a 10-mile errand runs about $5.50, a 50-mile drive roughly $27.50, a 100-mile trip near $55, a 500-mile drive close to $275, and a 1,000-mile road trip past $550. Each figure counts every category, not just fuel.
Compare the per-mile rate against what the alternatives actually cost: a transit fare, a rideshare quote, or nothing at all if the trip can be combined with another. Two separate trips to the same part of town cost twice what one combined trip costs, and the per-mile number makes that visible. It belongs in the same review as every other recurring line in your household budget, whichever method you use to allocate spending (Budgeting Methods Compared).
Using the Number: Repair, Replace, or Drive Less
Once the car is owned, fixed costs are already spent, so extra miles add only the variable portion. That tilts the math toward driving more, not less: insurance and registration do not change because you took the car instead of a rideshare.
The same logic works against a second vehicle. A second car brings its own full stack of fixed costs (insurance, registration, and its own depreciation), so it only pays off when it replaces enough miles on the first car to justify that stack.
For repair versus replace, compare the bill against the miles it buys. A repair that keeps the car running for several more years at your current per-mile cost is usually cheaper than the depreciation hit of a newer vehicle. The decision is not about the size of one invoice; it is about cost per mile going forward. A car with no loan still carries every category except the payment itself, which is why a paid-off car is not automatically a cheap one to run.
Set a tripwire in advance. If annual repairs plus maintenance push your per-mile number well above your baseline, price a replacement rather than reacting to a single bad month. Set the threshold yourself, at a level above your baseline that still leaves owning cheaper per mile than a replacement.
