Why use this calculator
Ask most drivers what their car costs and they quote the fuel bill. Fuel is usually less than a third of the real figure. Depreciation, the value the car loses every year whether you drive it or not, is often the single biggest cost on a newer car, followed by insurance, registration and servicing.
Leaving those out makes a second car look affordable, makes driving look cheaper than public transport and makes an expensive new car look like a small step up from a cheaper used one. This calculator puts every cost in one place using figures you can find on your own policy schedules and renewal notices, then turns them into a weekly and per kilometre number you can actually compare with a train ticket, a rideshare trip or a car subscription. The year by year table shows how the total builds over the time you plan to keep the car.
How to use it
- Enter the car's value today, the purchase price if new or a figure from a used car valuation site if you already own it.
- Enter the kilometres you drive a year, which your last two service records or registration renewals will show.
- Fuel use comes from the trip computer, and the fuel price from recent receipts.
- Insurance is on your policy schedule, and registration with CTP is on your renewal notice.
- Servicing is in the logbook or the dealer's capped price schedule.
- Tyres are a set's price divided by the years they last. Loan interest comes from your loan statement.
- Choose a depreciation rate and how many years you will keep the car.
What each result means
- Yearly running cost
- Everything the car costs you in its first year of the period, including the value it loses, not just what you pay at the pump.
- Cash you actually pay each year
- The yearly running cost without depreciation, so only the bills you pay from your bank account: fuel, insurance, registration, servicing, tyres and loan interest. Use it for your household budget.
- Driving 1,000 km less saves
- The fuel cost of every 1,000 kilometres at your fuel use and pump price. It shows what cutting a regular trip or car pooling is worth, since fixed costs stay much the same.
- Monthly cost
- The yearly cost divided by twelve, which is the figure to put in a household budget.
- Weekly cost
- The yearly cost divided by 52, useful for comparing with weekly public transport or car subscription prices.
- Cost per kilometre
- The yearly cost divided by kilometres driven. It falls as you drive more because fixed costs are spread further.
- Fuel
- What you spend on fuel in a year at the consumption and price you entered.
- Depreciation in year one
- The market value the car loses in the first year. You pay it when you sell or trade in, not at the time.
- Insurance and registration
- Your comprehensive premium plus registration and compulsory third party insurance, which you pay however little you drive.
- Servicing and tyres
- Scheduled servicing, a repair allowance and the yearly share of a set of tyres.
- Finance interest
- The interest part of your car loan for a year. Principal repayments are not a cost because they buy the car.
- Total cost over ownership period
- The sum of every year's cost over the years you plan to keep the car, including depreciation each year.
- Estimated value at end of period
- What the car might be worth when you sell it, after depreciation at the rate you chose.
The formula
Fuel equals kilometres divided by 100, times litres per 100 km, times the price per litre. Depreciation in a year equals the value at the start of that year times the depreciation rate, so the value falls by the same percentage each year. Yearly running cost equals fuel plus insurance plus registration plus servicing plus tyres plus loan interest plus depreciation. Cost per kilometre equals the first year's total divided by kilometres driven. Total cost over the ownership period is the sum of each year's total, with running costs held flat in today's dollars.
How this number is used in practice
Depreciation is why a slightly used car is often the best value. A new car commonly loses a fifth or more of its value in the first year and then slows down, so the second owner avoids the steepest part of the curve while still getting a modern, reliable car.
On a $50,000 new car, the first year's depreciation alone can exceed the fuel bill for three years of normal driving. Keeping a car longer spreads that loss over more years and more kilometres.
The per kilometre figure is the one to use when you compare options. If your total cost works out at 75 cents a kilometre, a 20 km return commute costs about fifteen dollars a day, which is the number to hold up against a train fare, a bike or working from home.
For work travel, the ATO's cents per kilometre method lets employees and sole traders claim a set rate per business kilometre up to 5,000 km, while the logbook method uses your actual costs and your business use percentage.
Worked examples
$35,000 car, 15,000 km a year, 8.5 L/100km at $2.00, no loan, kept five years
About $11,300 in the first year, or $942 a month and $0.75 a kilometre. Over five years the total is about $49,720 and the car is worth about $15,530.
$55,000 SUV on finance, 25,000 km a year, 10 L/100km, $2,500 interest
About $20,670 in the first year, or $1,723 a month and $0.83 a kilometre, with depreciation and fuel roughly equal at $8,250 and $5,000.
$12,000 older hatchback, 10,000 km a year, 6.5 L/100km, 10 per cent depreciation
About $5,450 a year, or $454 a month and $0.55 a kilometre, because depreciation on a cheaper car is small.
When people use it
- Comparing the true cost of a new car with a used one before you buy
- Deciding whether a household really needs a second car
- Comparing driving to work with public transport on a cost per trip basis
- Budgeting monthly for everything the car costs, not just fuel
- Weighing a car loan against a novated lease or car subscription
Tips
- Shop your insurance at every renewal. Loyal customers are often quoted more than new ones for the same cover.
- Capped price servicing only covers scheduled items. Budget separately for brakes, batteries and wiper blades.
- Correct tyre pressure and gentle driving can cut fuel use by several per cent with no cost at all.
- A car that is two or three years old has already absorbed the steepest depreciation, which often makes it the best value.
- If you use the car for work, keep a logbook for a continuous twelve weeks. It can support a much larger claim than the cents per kilometre method.
- Registration costs differ by state and vehicle type, so check your own renewal rather than a national average.
What it assumes, and where it stops being accurate
- Depreciation is a fixed percentage of the value at the start of each year. Real resale values depend on make, model, kilometres and condition.
- Fuel, insurance, registration, servicing, tyres and interest are held flat in today's dollars across the ownership period.
- Loan interest is an average yearly figure. On an amortising loan the interest falls each year as the balance reduces.
- Parking, tolls, fines, cleaning and roadside assistance are not included.
- The opportunity cost of the cash tied up in the car, which could otherwise earn interest, is not included.
Terms used on this page
- Depreciation
- The fall in a car's market value over time, a real cost that you pay when you sell or trade in.
- CTP insurance
- Compulsory third party insurance covering injury to other people, usually paid with registration.
- Cost per kilometre
- The total yearly cost of the car divided by the kilometres driven in that year.
- Total cost of ownership
- Every cost of a car over the years you keep it, including depreciation, fuel, insurance and servicing.
Questions people ask
- What does it cost to run a car in Australia?
- For a typical mid sized car driven about 15,000 km a year, the full cost including depreciation is commonly $10,000 to $15,000 a year, or roughly 65 to 100 cents a kilometre. Small cheap cars cost less, and large new SUVs on finance can cost well over $20,000 a year once depreciation and interest are counted.
- Why is depreciation counted when I do not pay it?
- You do pay it, just at the end. The difference between what you paid and what you get back when you sell or trade in is a real cost of owning the car, spread over the years you had it. Leaving it out makes new cars look far cheaper than they are.
- Should I include loan repayments as a running cost?
- Include only the interest. The principal part of each repayment pays for the car itself, and that cost is already captured by depreciation. Counting the whole repayment as well as depreciation would count the price of the car twice.
- How can I cut my car running costs?
- Keep the car longer to spread depreciation, shop insurance and compare excess levels at every renewal, keep tyres at the right pressure, service on schedule to avoid bigger repairs, and combine short trips. For many households the biggest saving is replacing a second car with public transport or occasional car share.
- Can I claim car costs on tax?
- Only the work related share. Employees and sole traders can use the cents per kilometre method up to 5,000 business kilometres a year, or the logbook method, which claims actual costs including depreciation multiplied by the business use percentage from a twelve week logbook. Travel between home and a regular workplace is private.
Use this with
Car Running Cost Calculator answers one part of the question. These pick up where it stops: EV vs Petrol Cost Calculator, Fuel Cost Calculator, Car Loan vs Lease Calculator, Fuel Efficiency Calculator and Loan Repayment Calculator.
Where these figures come from
Figures and rules on this page follow Australian law and ATO guidance.
- Green Vehicle Guide. Official fuel consumption figures for new vehicles sold in Australia
- Moneysmart: Budgeting. Government guidance on budgeting for transport costs
- Australian Taxation Office. Car expense claims: cents per kilometre and logbook methods
Car Running Cost Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.