Cost Per Mile Calculator

The cost of running a car is dominated by an expense that never sends you an invoice. Depreciation — the difference between what you paid and what you can sell it for — typically accounts for a third to a half of total ownership cost, and it accrues silently whether the car moves or not. People who budget only for fuel and insurance are usually underestimating their true cost by more than half.

Splitting costs into fixed and variable explains a lot of otherwise confusing behaviour. Depreciation, insurance, registration and loan interest are largely fixed: you pay them whether you drive five thousand miles or twenty-five thousand. Fuel, tyres and maintenance scale with distance. This is why the average cost per mile falls steeply as annual mileage rises, and why a car used occasionally is extraordinarily expensive per mile even though its total cost is modest.

The distinction also answers the practical question people usually mean. If you are deciding whether to take one more trip, the relevant number is the marginal cost — fuel, tyres and wear, typically fifteen to twenty-five cents a mile. If you are deciding whether to own the car at all, the relevant number is the full cost including everything fixed, which is often three to four times higher. Confusing the two leads people both to overuse cars they already own and to underestimate what owning one costs in the first place.