Car ownership cost calculator
Find out the true annual cost of owning a car. Beyond the purchase price, car ownership involves depreciation, insurance, fuel, servicing, MOT, tax and finance charges. Most people significantly underestimate what their car actually costs them each year.
The single most powerful lever in reducing car costs is depreciation, which most people never think about. A new car loses roughly 20% of its value the moment you drive it off the forecourt and up to 50% in the first three years. Buying a car that is 2 to 3 years old lets someone else absorb that initial depreciation hit. The running costs are broadly the same but the purchase and resale economics are fundamentally different.
Depreciation is the biggest cost
For most car owners depreciation accounts for 30 to 50% of the true annual cost of ownership. It is invisible because you do not write a cheque for it, but every year you own a car you lose value. Newer and more expensive cars depreciate fastest in pound terms.
PCP is often misunderstood
With PCP you are essentially renting the car for the contract period and paying interest on money you never own. The monthly payment looks low but the total cost across the contract is typically much higher than buying outright. The balloon payment at the end often surprises people.
Insurance group matters
Cars are grouped 1 to 50 for insurance purposes. A car in group 40 can cost 3 to 4 times more to insure than one in group 10, even if the purchase prices are similar. Check the insurance group before buying, not after.
The per-mile figure is useful
Knowing your true cost per mile helps you decide whether short journeys are worth driving, whether to take the car or the train for a longer trip, and whether your car is earning its keep relative to how much you use it.
Please note: All figures are estimates based on typical UK costs in 2025. Fuel prices fluctuate and are based on approximate 2025 pump prices. Depreciation rates are generalised estimates and vary significantly by make, model, mileage and condition. Finance cost calculations are illustrative. Insurance, VED and servicing costs vary by vehicle, driver profile and location. This calculator is for guidance only and is not financial advice.
What does the car ownership cost calculator do?
The car ownership cost calculator reveals the true monthly cost of running a car – beyond the headline finance payment or purchase price. Most people significantly underestimate their total car costs because they only account for visible costs (the monthly payment, petrol) and overlook depreciation, insurance, servicing, tyres, MOT, and road tax.
How to use this calculator
Purchase price (or finance amount): The cost of the car. If on finance, enter the total amount financed, not just the monthly payment.
Finance rate and term: If the car is on finance, enter the APR and term. The calculator adds finance interest to the total cost.
Annual depreciation: Cars lose value over time – typically 15 to 25% per year for standard vehicles, more for some makes in early years. The calculator uses an estimated residual value at the end of your planned ownership period to calculate the annual depreciation cost.
Insurance: Your annual premium.
Fuel or electricity: Annual fuel cost based on your mileage and consumption, or electricity cost for an EV.
Servicing and maintenance: Annual average cost including oil, filters, brakes, tyres, and unexpected repairs.
MOT: Annual cost (£54.85 for the test itself, plus any repair costs).
Road tax (VED): Annual vehicle excise duty.
Reading the result: The calculator shows the total annual and monthly costs, including all components. The total is almost always higher than people expect — a car that appears to cost £250 per month on finance often costs £600-£800 per month when all costs are included.
Frequently asked questions
What is car depreciation, and how does it affect cost? Depreciation is the reduction in the car’s value over time. For most cars, it is the single largest ownership cost – greater than fuel, insurance or finance. A car bought for £20,000 that is worth £12,000 three years later has depreciated by £8,000 (£2,667 per year, or £222 per month) — a cost that is often invisible because it does not involve a cash payment.
Is leasing cheaper than buying? Leasing eliminates depreciation risk and typically includes maintenance, making costs more predictable. Whether it is cheaper than buying depends on the specific vehicle, lease terms, and how long you would otherwise own the car. The calculator models purchase and finance; compare to a lease quote to see which is lower for your specific situation.
The information on this site is for educational and informational purposes only. Nothing on Be More Peter constitutes financial advice, and nothing should be treated as such. The calculators, articles and tools on this site are designed to help you understand financial concepts and run indicative numbers - they are not a substitute for professional advice tailored to your specific circumstances. Before making any financial decision - including decisions about mortgages, pensions, investments, savings or insurance — you should seek independent financial advice from a qualified adviser who is authorised and regulated by the Financial Conduct Authority (FCA). Calculator results are estimates based on the information you enter and the assumptions built into the tool. They are illustrative only and should not be relied upon as accurate projections. Rates, thresholds and rules change regularly - always verify figures with an appropriate professional or official source before acting on them. Be More Peter is not authorised or regulated by the FCA. The content on this site does not constitute a financial promotion.
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