True Cost to Own (TCO)
The total 5-year cost of vehicle ownership including depreciation, financing, fuel, insurance, and maintenance.
What is True Car Cost?
True Cost to Own (TCO) is the total expense of owning a vehicle over a specified hold period, going far beyond the purchase price. The five major cost categories are: depreciation (the largest component for new cars), financing interest, fuel, insurance, and maintenance and repairs. Edmunds research shows the average 5-year TCO for a new vehicle in 2024 is over $50,000. TCO per mile is often more useful than sticker price for comparing vehicles.
Formula
Worked Example
2024
Source: Edmunds — True Cost to Own 2024 (2024-01-01)
Calculate True Car Cost
Out-the-door price including taxes and fees
Estimated resale value as % of purchase price (new cars depreciate ~40% in 5 years)
Annual auto loan interest rate
Down payment as % of purchase price
Length of auto loan in years
Number of years you plan to own the vehicle
Expected annual miles driven (US average ≈ 15,000)
Current price per gallon of gasoline
Combined city/highway miles per gallon (or MPGe for EVs)
Annual full-coverage insurance premium
Oil changes, tires, scheduled service, and repairs
5-Year TCO
—