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//// Financial · Auto

True Cost of Owning a Car

The sticker price is just the beginning. See your monthly all-in cost, 5-year total, cost per mile, depreciation schedule, and net cost after resale. Buy vs lease comparison included.

401(k) Limit 2024$23,000
Roth IRA Limit$7,000
S&P 500 Avg Return~10%/yr
Car type:
(affects depreciation: -12%/yr)

Car & Loan

$
$
%
$
$
$
$

Monthly Payment

$441

loan only

Monthly All-In

$785

everything included

5-Year Total

$50,075

before resale

Cost per Mile

$0.78

at 12k mi/year

Hidden costs

Your insurance + fuel + maintenance + registration = $344/month — 0.8x your loan payment. Most first-time buyers only budget for the car payment.

5-Year Cost Breakdown

Loan (payments + down)$29,450
Insurance$9,000
Fuel$9,000
Maintenance$1,875
Registration$750
Total$50,075

Depreciation Schedule (used car)

YearEst. Value% RetainedLost This Year
Year 0$25,000100.0%—
Year 1$22,00088.0%−$3,000
Year 2$19,36077.4%−$2,640
Year 3$17,03768.1%−$2,323
Year 4$14,99260.0%−$2,044
Year 5$13,19352.8%−$1,799
Net cost after resale (5yr total − resale value)$36,882
1

Loan amount

loanAmount = purchasePrice − downPayment

loanAmount = $25,000 − $3,000

= $22,000

2

Monthly loan payment (amortization formula)

PMT = P × r(1+r)^n / ((1+r)^n − 1)

PMT = $22,000 × 0.006250 × (1+0.006250)^60 / ((1+0.006250)^60 − 1)

= $441

Standard amortization: each payment covers interest on remaining balance plus principal reduction.

3

Total interest paid over loan term

totalInterest = (monthlyPayment × months) − loanAmount

totalInterest = ($441 × 60) − $22,000

= $4,450

4

Annual non-loan ownership cost

annualCost = insurance + maintenance + fuel + registration

annualCost = $1,800 + $375 + $1,800 + $150

= $4,125/year ($344/month)

These "hidden" costs often exceed the loan payment itself for many car owners.

5

Monthly all-in cost

monthlyAllIn = monthlyPayment + (annualOwnershipCost / 12)

monthlyAllIn = $441 + $344

= $785

6

Cost per mile (12,000 miles/year)

costPerMile = monthlyAllIn / 1,000

costPerMile = $785 / 1,000

= $0.78/mile

Assumes 12,000 miles driven per year (1,000 per month) — adjust for your actual mileage.

7

5-year depreciation — resale value

Each year: value × 0.88 (used car -12%/yr)

Starting: $25,000

= Resale at year 5: $13,193 (52.8% retained)

Used car depreciation: ~12%/yr (industry average)

8

Net 5-year cost after resale

netCost = fiveYearTotal − resaleValue

netCost = $50,075 − $13,193

= $36,882

The true economic cost of owning for 5 years — what you spend minus what you recover.

Key insight

The loan payment is just the start. Insurance, fuel, maintenance, and registration often add 50-100% more per month on top of the loan payment. Always budget the all-in number before buying.

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