Long-Term Cost of Ownership

Total cost of ownership includes: purchase price (including financing/interest), depreciation (value loss), fuel costs, insurance premiums, maintenance and repairs, registration fees and taxes, and any other ownership expenses. It represents the true cost from purchase to sale.

Total 5-year ownership costs typically range from 1.5-2.5x the purchase price. For a $30,000 vehicle, expect $45,000-$75,000 total cost over 5 years. A $20,000 vehicle may cost $35,000-$50,000 total. This includes purchase, depreciation ($10,000-$20,000), fuel ($10,000-$15,000), insurance ($6,000-$10,000), maintenance ($5,000-$8,000), and registration.

Depreciation is often the largest single cost, especially in the first 3 years (vehicles lose 20% first year, then 15% annually). For new vehicles, depreciation often accounts for 30-40% of total ownership cost. Fuel is typically the second-largest cost (25-35%), followed by purchase/interest (20-30%), insurance (15-20%), and maintenance (10-15%).

Reduce ownership costs by: buying used (less depreciation), choosing fuel-efficient vehicles, maintaining good credit for better loan rates, keeping vehicles longer (spread depreciation), performing regular maintenance (prevents costly repairs), shopping insurance rates, and driving efficiently to reduce fuel costs.