Note: costs mentioned below are given in US dollars as a general point of reference — actual prices vary by country, currency, and local market.
Total cost of ownership over 5 years commonly runs 1.5-2.5x the purchase price once depreciation, fuel/energy, insurance, maintenance and financing are included, and depreciation alone is typically the single largest cost — often 40-50% of a new car's value gone by year five. This tool adds up all five cost categories for realistic annual mileage instead of comparing sticker prices alone, which routinely misranks which car is actually cheaper to own.
At a glance
| Cost category | Typical share of 5-year TCO |
|---|---|
| Depreciation | 35-50% |
| Fuel/energy | 15-25% |
| Insurance | 10-20% |
| Maintenance & repairs | 10-15% |
| Financing (interest) | 5-15% |
What this tool does
This calculator-style comparison totals five-year ownership cost across depreciation, fuel or energy, insurance, maintenance/repairs and loan interest for a given annual mileage, then ranks models by *total cost of ownership* rather than purchase price — because the cheapest car to buy is often not the cheapest car to own.
Why depreciation dominates the total
New cars typically lose a large share of their value in the first few years — a widely cited pattern is roughly 20% in year one and 40-50% by year five, though this varies enormously by brand, model and market demand. A car with a lower purchase price but weak resale value can cost more in dollar/pound terms of depreciation than a pricier car that holds value well, which is why comparing sticker prices alone is misleading for anyone who won't keep the car until it's fully paid off and worn out.
- Brand and model reputation for reliability strongly influences resale value.
- Popular trims and colors resell better than unusual specs.
- High-mileage and heavily optioned cars (which cost more to fix) often depreciate faster.
- EVs have historically shown more variable depreciation than petrol equivalents as battery technology and incentives shift — check current used-EV market data before assuming either faster or slower depreciation.
The other four categories
Fuel/energy cost scales directly with annual mileage and efficiency — a 20% efficiency gap between two similar cars compounds significantly over 60,000-100,000 miles. Insurance varies by vehicle repair cost, safety rating and theft rate as much as by driver profile. Maintenance and repair costs rise both with vehicle age and with mechanical complexity — turbocharging, air suspension and dual-clutch transmissions all add long-run service cost versus simpler mechanicals. Financing cost depends entirely on the loan rate and term, which is why comparing two cars financed at different implied rates can distort a true ownership-cost comparison.
How to use this comparison correctly
- Enter your actual annual mileage — TCO rankings change meaningfully between 8,000 and 20,000 miles/year.
- Use your real financing rate, not an advertised promotional rate that may not apply to your credit tier.
- Factor in a realistic ownership period — a 3-year TCO ranking can differ from a 7-year ranking because depreciation curves flatten while maintenance costs rise with age.
- Include insurance quotes for your specific profile rather than a published national average, since premiums vary widely by driver.
Worked example
Car A costs $28,000 new with strong resale value, retaining about 55% of value after 5 years, averaging $500/year maintenance and 32 mpg. Car B costs $25,000 new but retains only 40% of value, averages $700/year maintenance, and gets 27 mpg. At 12,000 miles/year over 5 years, Car A's lower depreciation and fuel cost can outweigh its higher sticker price, producing a lower total cost of ownership despite costing more to buy — exactly the kind of result a sticker-price comparison alone would miss.
Depreciation forecasts, fuel prices and insurance rates are estimates based on historical patterns, not guarantees for any specific vehicle — always sanity-check with current market data before making a purchase decision.
Frequently asked questions
What is total cost of ownership (TCO)?
Which cost category matters most in total cost of ownership?
Is a cheaper car always cheaper to own?
How does annual mileage affect total cost of ownership rankings?
Does financing rate affect total cost of ownership comparisons?
Sources & further reading
Figures, prices and policy details were current at the last-updated date above. Automotive pricing, incentives and regulations change frequently — verify time-sensitive details with the linked primary sources. Read our editorial policy and fact-checking standards.
