How to calculate annual cost per mile?

How to calculate annual cost per mile?

They say, that a car is a transport, not a luxury. But how much exactly does it cost to drive a car in this economy that we have today? Calculating your cost per mile is not only for those who run trucking companies. If you tend to be a budget aware person, then this article is for you.


Start with the fixed costs. These include insurance, license and registration fees, finance charges on an outstanding loan, and taxes if your state has a sales-tax requirement. Also, consider including depreciation. The easiest way to calculate it is by using an online calculator, available on websites such as,, or


Operating costs include regular maintenance such as routine servicing, parking and toll fees, car washes, tires, and other expendable parts. Calculate total operating costs and then divide this amount by annual miles driven.

Example: If you spent $1,000 to operate a vehicle and drove 10,000 miles, your operating cost is 1,000 divided by 10,000, or 10. cents per mile.


To calculate Fuel Cost you could use the fuel consumption numbers provided by the manufacturer. But these numbers often do not represent your car’s fuel consumption based on its condition, your driving style, and the amount of time you spend in traffic jams. So consider keeping a personal log with recipes from the gas stations. To calculate the fuel cost, divide fuel expenses by the annual miles driven.

Example: You drove 1000 miles and spent $100 on fuel, your fuel cost is 100 divided by 1000 = $0.1 or 10 cents per mile.


Now, simply sum up all of the costs we calculated above and you get your annual cost per mile.


So, you have calculated the average cost per mile of driving your vehicle, and now you see how much you can save by taking a bus or commuting on a bike. You even might be tempted to ditch your car altogether. Well, unfortunately, the world is not that simple. There are also things that numbers don’t show. Those are status, personal satisfaction of driving a car, or the sheer satisfaction of putting on a four-wheel metal shell that is shielding you from the outside world. So in the end is always up to you to decide whatever that cost is justified. But making your car expenses more transparent for your own budget is a good stepping point to true financial freedom.