The payment on a $35,000 SUV is $594 a month. The car actually costs $734. The difference lives in six lines, most of which never send you a bill. Here's the full stack, the math on a real example, and which lines you can actually move.
| Line | What it really is | Typical share |
|---|---|---|
| Depreciation | Value the car sheds silently | 35-45% |
| Insurance | Full coverage, averaged over the years | 15-25% |
| Fuel | Miles ÷ MPG × price | 10-20% |
| Financing | Interest only — principal buys the asset | 5-15% |
| Maintenance + repairs | Keeping it running vs fixing what broke | 10-15% |
| Fees | Registration, title, inspections | 1-5% |
Notice what's missing: the principal of your loan. That's not a cost, it's a purchase — the depreciation line already captures how much of that purchase evaporates. This is why a $0-down buyer and a cash buyer can have identical ownership costs despite wildly different cash flows.
Common setup: $35,000 SUV, $5,000 down, 7% APR for 60 months, kept 5 years, 12,000 miles a year, 28 MPG, $3.50 gas, $1,800-a-year insurance, $750 maintenance, $300 repairs, $180 registration, sold at 55% of original price.
Total: $44,042. Per month: $734.04. Per mile (60,000 of them): $0.734. Run your own numbers on the cost of ownership calculator — every input above is editable, and the interest model amortizes your actual loan terms.
$15,750 of that $44,042 — 36% — is depreciation, and no invoice ever arrives for it. That invisibility warps decisions. People upgrade because "the payment is only $50 more" while the new car's first-year depreciation alone can exceed $7,000; meanwhile a $600 repair on a paid-off car feels outrageous even when the alternative costs ten times that in fresh depreciation.
The curve is also cruelly front-loaded: the biggest single drop is the drive off the lot, years 1-4 shed the most, and by year 8 a mainstream car is losing maybe $1,000-$1,500 a year. This is the arithmetic behind the oldest advice in personal finance — own cars 8-10 years — because you amortize the expensive early years across many cheap late ones. Stretch the example SUV to 10 years (with rising repair budgets) and the annual average falls by roughly a third.
Enter price, loan, miles, and the recurring lines. Get the 5-year total, per-month, and per-mile in one screen.
Cost of Ownership Calculator →Same 5 years and 12,000 miles a year on a $15,000 used sedan, bought cash, 60% resale, $1,400 insurance, $900 maintenance, $600 repairs, 30 MPG, $120 registration: depreciation $6,000, fuel $7,000, insurance $7,000, care $7,500, fees $600 — total $28,100, or $468.33 a month and $0.47 a mile. That's $266 a month cheaper than the financed new SUV, despite the used car eating a bigger repair budget.
The honest caveats: used means repair variance (one transmission event can erase a year of the gap), higher borrowing rates on older cars, and you inherit someone else's maintenance history — get a prepurchase inspection. But the structural advantage is real: slower depreciation and cheaper insurance compound across every year you keep it. The new vs used calculator runs the comparison with your own numbers.
Cost per mile turns car ownership into a decision tool. At $0.73 a mile, a 40-mile round trip "costs" $29 — useful for weighing drive-versus-ship, reimbursing a friend fairly, or deciding whether a second car makes sense (a $4,000-a-year beater costs $0.33 a mile at 12,000 miles, but $1.10 a mile if you only drive it 3,000). Employers use the same logic: the IRS business mileage rate for 2025 is $0.70 a mile, built from depreciation, fuel, maintenance, insurance, and fees — notice it lands right at our SUV example. It's a defensible number to quote when someone borrows your car a lot.
Every figure here is a representative example, not a quote; your insurance, fuel prices, taxes, and resale values will differ. Plug your real numbers into the calculator before making money decisions on the back of this article.
AAA's 2024 Your Driving Costs study put the average new car at $12,297 a year including fuel, maintenance, tires, insurance, license/registration/taxes, depreciation, and finance charges — about $1,025 a month. Categories run from under $10,000 a year for small sedans to over $15,000 for half-ton pickups. Used cars typically cost $4,000-$7,000 a year all-in.
A representative financed example — $35,000 SUV, $5,000 down, 7% APR, 12,000 miles a year, 28 MPG, $1,800 insurance, sold at 55% of original value — totals $44,042 over 5 years: $15,750 depreciation, $5,642 interest, $7,500 fuel, $9,000 insurance, $5,250 maintenance and repairs, $900 registration. That's $734 a month and $0.734 a mile.
$500-$800 a year keeps a mainstream car under 5 years old healthy; budget $900-$1,200 once it's past warranty, plus a separate repair reserve of $500-$600 a year for the items that eventually fail (battery, brakes beyond pads, suspension, a/c). The old 1-2 cents per mile rule now runs 8-10 cents per mile all-in for care and repair on a modern car.