Methodology

We want you to trust the numbers on this site. This page explains exactly how our Car Cost of Ownership Calculator works — the formulas it uses, the data sources it draws on, and the assumptions we make when your input doesn't specify a value.

Loan and financing

Monthly loan payment is calculated with the standard amortization formula:P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]where P is the amount financed (purchase price − down payment + sales tax + fees, if financed), r is the monthly interest rate (APR ÷ 12), and n is the loan term in months. Total interest is the sum of monthly payments minus the amount financed.

Fuel and electricity

Annual fuel cost is (annual miles ÷ MPG) × price per gallonfor gas vehicles, and (annual miles ÷ mi/kWh) × price per kWhfor EVs. Default fuel prices update quarterly from EIA regional averages; you can override them for your local station.

Insurance

Insurance defaults are drawn from published state-level averages for full-coverage policies with 100/300/100 liability limits, $500 collision/comprehensive deductibles, and a 35-year-old driver with a clean record. Your actual premium depends on ZIP code, credit score, vehicle class, and driving history — always use your own quote for precision.

Maintenance and repairs

We model maintenance as an escalating annual cost: ~$500 in year 1, growing roughly 10–15% per year to account for wear items (tires, brakes, batteries) coming due in years 3–5. EVs receive a 30% reduction on this figure but a 10% surcharge on tire replacement costs due to higher curb weight.

Depreciation

Depreciation follows a compounding annual rate applied to the previous year's residual value. Default rate is 15% per year, matching the long-run mainstream-vehicle average that produces a ~50% residual at year 5. You can adjust this to reflect specific segments (luxury depreciates faster; pickups depreciate slower).

Taxes and fees

Sales tax is calculated on the purchase price minus any trade-in credit (where the selected state allows a trade-in tax reduction). Registration is a flat annual figure based on state defaults; value-based states apply a declining schedule as the vehicle depreciates.

What we don't include

The calculator does not model: parking, tolls, speeding tickets, at-fault-accident premium surcharges, aftermarket accessories, or the opportunity cost of your down payment. These are meaningful for some drivers; we exclude them because their variance is too large to model responsibly.

Disclaimer

All outputs are estimates for planning purposes only. They are not financial, tax, or insurance advice. See our disclaimer.