True Cost of Car Ownership: My Experience, By the Numbers

I joke with my friends that it only took me 18 months living in Seattle to go from 4×4 SUV driver to bus-riding hippy. In reality, my choice to go car-less had nothing to do with living in Seattle or becoming more “green” or any other social pressure. For me, I hated owning a depreciating asset that sat idle 95% of the time. So, on a whim, in late-September I decided that I would sell my beloved 2005 Jeep Grand Cherokee Limited with leather, sunroof, seat heaters, and all the other cool stuff that I loved when I bought it.

Infographic Credit:

Even though my decision wasn’t primarily motivated by cost, I’m still compelled to justify it with a cost-savings analysis. Based on my conversations on the topic, since going car-less, I think that most of us fail to recognize the real cost of owning our cars.

Let’s take a look.

Cost of Owning a Car: Standing Cost vs. Running Cost

Standing costs are what you pay, whether or not you use your car. Your car payment, auto insurance, loan interest, and depreciation are all standing costs. Running costs are those incurred from driving your vehicle, such as gas, maintenance, tires, parking fees and tickets.

Standing Costs

Standing costs were far and away my primary motivation for going car-less (also, just wanting to see if I could do it). I work remote, from a home office, so I didn’t drive as frequently as many of you. Thus my car was “standing” most of the time. On the one hand, my cost of ownership was reduced, because I didn’t purchase much gas, and got fewer oil changes and car washes. On the other hand, those standing costs drove me crazy, because they were largely wasted.

Here’s a breakdown of my primary standing costs:

DEPRECIATION: $5,700 total over 2 years and 10 months of ownership. I purchased my 2005 Jeep in January of 2010, so I escaped the bulk of that huge depreciation cost. Additionally, I got a good price when I sold. However, I still paid $5.51/day in depreciation, even when the car never moved an inch.

By far the number one cost of car ownership, the average new car depreciates by 65% over 5 years. This one is easy to overlook, as a day-to-day expense, because it isn’t realized until some undetermined future date when you sell (doesn’t come in the form of an out-of-pocket expense).

Pro Tip: Buy used to avoid the biggest depreciation hit (even 1-2 years old will save you significantly), and own the car for 8+ years. If you do those two things, you will absolutely maximize the value of your car purchase.

Depreciation accounts for roughly 48% of the total cost of ownership on average

CAR/LOAN PAYMENT: $380.00/month (includes interest and tax, both of which could be their own cost categories)

*Loan Financing: $2,100 over 2 years and 10 months (represents 6.8% APR). On average, loan financing accounts for 12% of the cost of owning a car for 5 years.

AUTO INSURANCE: $95/month (not a bad deal)

VEHICLE REGISTRATION/OWNERSHIP TAX $68.75/year in WA state. I paid significantly more than this figure, because I had to fully register my Jeep in CA, CO, and WA (thanks to 3 moves in a short period of time). I used the normal renewal figure here, because my situation was abnormal.

Running Costs

My Jeep

My Jeep: 8 years old and looked brand new

Running costs are easier to justify, because you pay for what you use. The big issues with running costs are 1) they are volatile and adjust beyond your control (ie. gas prices), and 2) occurrences never seem to come at a good time. For example, your car breaks down right after you’ve finished all of your Christmas shopping. Worse yet, you’re on your way home from the mall, it’s snowing outside, and your broke from all of the great presents you just bought- that’s when your car decides to break down.

Here’s a breakdown of the primary running costs:

GAS: Estimate $7,040 total over 2 years and 10 months of ownership (I subtracted for two moves during that time period, which were outlier scenarios and totaled roughly 1,300 miles)

MAINTENANCE: Estimated $1,200 total (I was pretty lucky and didn’t have any significant problems with my Jeep). That total includes tires (which I bought used), oil and filter changes, a diagnostic check at the dealer (when I was taken advantage of), car washes, and other standard maintenance.

PARKING AND TOLLS: Estimated $1,000 total over 2 years and 10 months

The sum of all of these figures represent a low-end estimation. I didn’t factor in many other costs, such as: AAA membership, smog inspections, cost of capital (opportunity cost of having money tied up in a vehicle), or vehicle break-in/theft. More importantly, I bought my Jeep 5 years used and got a killer deal. Had I purchased it new, my cost of ownership would have gone up dramatically.

Despite low running costs (due to not driving much) and getting a killer deal on my used Jeep, based on the calculations above, I estimate that the true cost of ownership of my vehicle was over $900/month or $30/day. To put that in perspective, I recently purchased an unlimited monthly bus pass for less than the cost of 3 days of car ownership.


Stay tuned for a follow up post shedding light on my experience getting around without a car.



  1. I haven’t had, or needed, a car at all in the 10 years I’ve been living in Chicago. We are lucky to have an excellent transit system and with a Zipcar membership, I’m in good shape for the few annoyances where having a car is really, really nice — like buying more than one bottle of wine at once, for example. Priorities 🙂

    Another great post, thanks for giving me ammo against all of my friends in the burbs that are baffled by my car-less-ness!

    1. Thanks Laura!

      Keep an eye out for They just launched here in Seattle about 6 weeks ago, and it’s AWESOME! They’re just like Zipcar, except no reservations needed and you can park them anywhere. I just checked and they haven’t launched in Chicago yet, but I’m guessing they will in the next couple of months.

      1. Wow nice! Will keep an eye out for sure.

  2. I really liked this post. I have never taken a driving lesson, never owned a car, never paid for parking, but then again I live in London where all you need is the tube!

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