How the calculation works
In plain text
Value at the end = P (1 - l)^(t)
Total cost = value lost + yearly running costs × t
What this comparison shows
It puts two cars side by side over the same number of years. For each car it adds the value the car loses and the yearly running costs, then shows the monthly cost, the total cost, and which car costs less to own.
How to use it
Years. Enter how many years you plan to keep each car. Both cars use the same number, so the totals cover the same time.
Price and loss in value. For each car, enter the purchase price and the share of its value you expect it to lose each year.
Running costs. For each car, enter your estimates for insurance, fuel or charging, maintenance and repairs, and registration and fees. Leave any item empty if it does not apply. Use the same kind of figures for both cars, unless you know they differ.
How the comparison is worked out
For each car, the value lost is the price minus the value the car has at the end, using the yearly loss rate. The running costs are the yearly costs added together and multiplied by the years. The total is the value lost plus the running costs, and the monthly figure is the total divided by the months you keep the car. The difference between the two totals, divided by the months, gives the monthly difference.
Why the cheaper car to buy can cost more to own
A lower price is only one part of the cost. A car that costs less to buy often loses less value in dollars, but it may cost more to insure, fuel or repair. The comparison shows which effect is bigger for your numbers. Change one input at a time to see which one moves the result most.
What the result cannot tell you
Every figure is an estimate built from the numbers you enter. Repairs are unpredictable, fuel and insurance prices change, and a car does not lose the same share of its value every year. The comparison does not include loan interest, which you can add with the Loan Payment Calculator. It also leaves out taxes and fees paid when you buy.
Worked example: two cars kept five years
This example uses assumed inputs so you can follow each step. Every figure comes from the calculator's own formula. Your figures will differ.
- Find each car's value lost. Car A costs $30,000 and loses 15% a year, so it is worth about $13,311 after five years and loses $16,689. Car B costs $18,000 and loses 12% a year, so it is worth about $9,499 and loses $8,501.
- Add up each car's yearly running costs. Car A has $1,800 of insurance, $1,500 of fuel, $700 of maintenance, and $200 of registration, which is $4,200 a year, or $21,000 over five years. Car B has $1,500, $1,700, $1,100, and $150, which is $4,450 a year, or $22,250 over five years.
- Add the two parts for each car. Car A is $16,689 plus $21,000, which is $37,689. Car B is $8,501 plus $22,250, which is $30,751.
- Spread each total over 60 months. Car A is about $628 a month. Car B is about $513 a month.
| Part | Car A | Car B |
|---|---|---|
| Purchase price | $30,000 | $18,000 |
| Yearly loss in value | 15% | 12% |
| Value lost over five years | $16,689 | $8,501 |
| Running costs a year | $4,200 | $4,450 |
| Running costs over five years | $21,000 | $22,250 |
| Total cost of ownership | $37,689 | $30,751 |
| Monthly cost | $628 | $513 |
Car B costs about $6,938 less over the five years, which is about $116 a month. It costs $250 a year more to run, but it loses $8,188 less in value, and that is the bigger effect here. For a single car with the resale price method, try the Total Cost of Ownership Calculator.