Car total cost of ownership: buy new, buy used, or keep your car

• True cost is the cash you spend minus what you still own at the end. The cash is the down payment, the loan payments made inside five years, insurance, fuel or charging and maintenance. What you still own is the car's resale value minus any loan balance left. The same total equals depreciation plus loan interest plus running costs.
• Depreciation is how much value the car loses. You enter the share lost in year 1 and the share lost in each later year, and the lab applies them to the price over five years.
• The loan uses a level payment. If the term is longer than five years, the balance still owed at year five is charged against the resale value.
• Fuel comes from miles a year and the car's efficiency: miles per gallon for gas, kWh per 100 miles for electric.
• The 2025 law added a deduction for interest on a car loan. The lab values it for the new car only and only when you check the box. It does not apply to used cars, leases or cars assembled outside the United States.

The new car costs $5,000 down and a 60-month loan at 6.5% with $170 insurance, $40 maintenance and 20% then 12% yearly depreciation. Its payment is $587, its five-year cost is $43,028 and its true cost is $717 a month. The used car has $3,000 down on a 48-month loan at 8%, $140 insurance, $90 maintenance and 12% then 9% depreciation: a $415 payment, $32,152 over five years and $536 a month. Keeping the $10,000 car with no loan, $120 insurance, $150 maintenance and 8% depreciation costs $28,009, or $467 a month. The payment is not the cost: the owned car has no payment and still costs $467 a month, mostly in running costs and lost value. All three use 12,000 miles a year and the sample fuel prices of $3.50 a gallon.

• Insurance, maintenance, depreciation and fuel prices are values you enter. The samples are not market averages, and quotes vary with age, location and record.
• Taxes, registration, fees, trade-in values and leasing are not modeled.
• Resale value is a smooth curve from the two depreciation rates. Real cars lose value unevenly, and mileage and condition matter.
• The interest deduction treats each twelve payments as one tax year, holds income flat, and values the saving with the 2026 federal brackets.
• Keeping a car assumes it needs no purchase of its own in five years. A repair bill larger than your maintenance estimate would raise the cost.

Finance Quest is educational. It is not financial advice, and no calculator here knows your full situation.

A payment can be lowered by stretching the loan, and a longer loan adds interest and can leave you owing more than the car is worth. A new car that costs $587 a month also loses 20% of its value in the first year, which is not in the payment. Comparing five-year cost, and the monthly figure that comes from it, puts depreciation, interest and running costs on the same footing as the payment.

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