Total Cost of Car Ownership Calculator

What is the true cost of owning a car?

The true cost of owning a car is the finance plus all the running costs added together. The finance is the obvious bit; insurance, fuel, tax, servicing and tyres are what people forget.

A car that looks affordable on the finance monthly can be a stretch once you add it all up. To get the finance part right first, work it out on the PCP, HP or loan calculator, then bring the figure here.

The true-cost rule is simple: always compare the total amount payable across the whole time you keep the car, not just the monthly. The finance monthly is what you feel; the total is what the car actually costs you. On a four-year deal, running costs can rival the finance itself, so the headline monthly is at best half the picture.

What goes into the total cost?

Five running costs sit on top of your finance: insurance, fuel or charging, road tax, servicing and tyres. Together they often rival the finance payment itself.

Notice that depreciation sits on the list even though you never see a bill for it. A car silently loses value every month, and that loss is real money you hand over when you sell or part-exchange. We treat it separately because it is not a running cost you pay out of your current account — but it belongs in the true total.

• Insurance: typically £600–£1,000 a year, more for newer or higher-powered cars.
• Fuel or charging: roughly £1,200–£1,800 a year for an average petrol or diesel mileage.
• Road tax (VED): from around £190 a year for most petrol and diesel cars, more in year one for higher-emission cars.
• Servicing, MOT and tyres: budget around £400–£600 a year on average.
• Depreciation: not a monthly bill, but the single biggest cost of all — see the dedicated section below.

A worked example of the real monthly cost

On a typical financed car, running costs add around £233 a month on top of the finance. That turns a £452 finance monthly into a true cost closer to £685.

The finance figure uses the same £20,000 / £2,000 / 48-month / 9.9% example we use across the site, so it matches the deposit and affordability calculators exactly. On PCP the finance monthly is lower (about £314 with an £8,000 balloon) but the total to own is higher — see the balloon payment calculator for that trade-off. Either way, the running costs land on top.

Finance cost vs running cost compared

The finance is usually the biggest single cost, but running costs are not far behind. Seeing them side by side stops the budget surprise.

Check the running cost against your budget first with the affordability calculator, so the real monthly is no shock. A finance monthly of £452 only tells you what leaves your account for the loan — the car itself consumes another £233 a month just to insure, fuel and keep legal.

Notice how the running costs are spread unevenly. Insurance is usually paid as one or two lump sums, fuel is weekly, and servicing arrives in bursts. The monthly column smooths that out so you can budget; the yearly column shows what actually leaves your accounts over twelve months.

How the true total changes by car type

The same finance monthly buys very different true totals depending on the car — an electric car can cost less to run but more to insure, and a diesel can save on fuel but cost more in tax and servicing. Compare the full picture, not the fuel alone.

These are indicative ranges — your real figures depend on your mileage, your postcode, your driving record and the exact model. The point is that no single column tells the story. An electric car roughly halves the fuel line but often pushes insurance up, so the net saving is real but smaller than the headline. Run your own numbers on the electric car finance calculator before you commit.

Diesel looks cheap on fuel for high-mileage drivers, but the tax and servicing lines creep up: diesel cars over certain emissions thresholds pay a higher first-year VED, and diesel servicing often costs more over time as the exhaust-after-treatment system ages. The true total only emerges when you add the columns together.

Depreciation — the hidden cost

Depreciation is usually the single biggest cost of owning a car, even though it never appears on a monthly statement. It is the difference between what you paid and what the car is worth when you sell it.

A new car typically loses 15–35% of its price in the first year and continues to fall from there. On a £20,000 car, that can be £3,000–£7,000 of value gone in twelve months — far more than the insurance, the fuel or the tax. Because you do not pay it monthly, it is easy to ignore until the day you trade in and the dealer's offer comes in lower than you expected.

Depreciation matters even more on finance, because it drives negative equity. If the car's value falls faster than the finance balance, you owe more than the car is worth. Check your position across the term on the negative equity calculator. A bigger deposit cushions the fall because you start the agreement owing less relative to the car's value.

Used cars depreciate more slowly in percentage terms, which is one reason a used car's true total over four years is often far lower than a new car's — even at a higher APR. See the side-by-side on the used car finance calculator and the new car finance calculator.

MOT, tyres and the costs people forget

An annual MOT, a set of tyres every two to three years, and the occasional repair are the costs most drivers forget to budget — and they arrive as lumpy bills, not smooth monthlies. A sinking fund smooths them out.

The trick is to treat these as a monthly cost even though they arrive in bursts. Set aside roughly £40–£60 a month in a separate pot and the bills stop being a shock. The calculator above lets you fold that figure into the monthly total so it is visible from the start, rather than buried until the MOT fails.

• MOT: about £54.85 a year for cars (the maximum statutory test fee), required once a car is three years old.
• Tyres: a full set of four is often £300–£600 depending on the car, usually needed every 20,000–30,000 miles.
• Brakes, exhaust and clutch: occasional but inevitable — budget a few hundred pounds a year on average.
• Breakdown cover: roughly £30–£100 a year depending on the level of cover.

Insurance — the biggest variable

Insurance is the running cost that swings most from driver to driver — from under £300 for an experienced motorist in a low-risk postcode to well over £2,000 for a newly-qualified driver in a higher-powered car. Your premium is the second-largest line after fuel for many drivers.

Premiums are set from dozens of factors: your age, your postcode, the car's group, your no-claims bonus, your annual mileage, where the car is parked overnight, and any convictions or claims. The same driver can pay half as much by changing one of those — which is why shopping around every year, rather than auto-renewing, typically saves hundreds of pounds.

Insurers are also required to show the previous year's premium at renewal, so you can see the jump. If the renewal is markedly higher, compare it against the market — comparison sites, a broker and a direct quote usually surface a cheaper deal. Treat the saving as a direct cut to your true monthly cost: £300 off your premium is £25 a month back in your pocket.

Insurance is also affected by the car you finance. A higher group rating means a higher premium, which is part of the true cost of choosing a faster or newer model. Weigh the finance monthly and the insurance together before you pick a car, not after.

How to cut the total cost

You can cut the total cost on both sides — a cheaper finance deal and lower running costs. Small savings on each add up over a few years.

On the finance side, a bigger deposit and a lower APR cut the cost — compare deals fairly on the APR calculator. On the running side, an electric car can lower fuel and tax, though insurance is sometimes higher. Always compare the total, not the monthly.

Three running-cost levers are usually worth pulling. First, shop your insurance every year at renewal — auto-renewing is rarely the cheapest route. Second, switch to a more economical car or an EV if your mileage justifies it: a driver doing 12,000 miles a year saves far more on fuel than one doing 4,000. Third, keep the car serviced on schedule — a missed service can trigger a larger repair bill later and dent the car's resale value.

How this total-cost calculator works

This calculator takes your finance figure and your running costs and adds them into one monthly and one yearly total, so you see the true cost instead of just the loan payment. Change any input and both figures move.

On the finance side we use the standard amortisation formula: the amount financed (price minus deposit) is spread across the term at the monthly rate derived from the APR. On PCP we subtract the present value of the balloon before dividing the monthly. The total amount payable is the deposit plus all payments, plus the balloon if you keep the car.

On the running-cost side we add insurance, fuel or charging, road tax, servicing and tyres, and show the sum as a monthly and an annual figure. Depreciation is shown separately because it is not a cash cost you pay each month — but it belongs in your mental model of what the car truly costs. The figures are estimates; where you have real quotes, use them.

Was your finance more expensive than it should have been?

If your car finance was mis-sold between 2007–2024 through hidden commission, you overpaid on the biggest cost of all. You may be owed redress.

The FCA's redress scheme follows the Supreme Court ruling of 1 August 2025. Estimate your position with the compensation estimator — an estimate, not a promise, and free to claim yourself.

Hidden commission raised the APR, which raised the interest on the amount you financed — the single biggest line in your true total. Redress would not undo the running costs, but it would lower the finance total, which is the part you can still do something about.