24 October 2026 · 5 min read · Slowforge Studio
How much does it really cost to own a car? A line-by-line breakdown
Fuel is only a third of it. Depreciation, insurance, servicing, tyres, parking and finance, with a method to work out your own cost per kilometre and a worked example for India.
Owning a car costs two to three times what you spend on fuel. Fuel is the cost you see every week, so it is the one people quote, but depreciation, insurance, servicing, tyres, parking and finance add up to more. Working out the real figure takes one afternoon and a year of receipts, or an app that has been collecting them for you. Here is how to do it, with the categories most people miss.
The seven lines
1. Depreciation
The gap between what you paid and what you will sell it for, spread over the years you own it. A new car loses roughly 15 to 25 percent in year one and 10 to 15 percent a year after that; by year five most are worth 40 to 50 percent of the original price. On a ₹10 lakh car that is around ₹1 lakh a year, or ₹8,000 a month, before you have driven anywhere. Used cars depreciate more slowly in absolute terms, which is the whole argument for buying a three-year-old car.
2. Fuel
Price per litre ÷ fuel economy × distance. At ₹105 a litre, 15 km/L and 1,200 km a month, fuel is ₹8,400 a month. The two numbers you control are fuel economy (driving style, tyre pressure, servicing) and distance. How to measure fuel economy properly is its own guide.
3. Insurance
Comprehensive cover on a mid-size car in India runs a few thousand to around twenty thousand rupees a year depending on the car's value, your city and the no-claim bonus. In the United States the national average is around $2,000 a year. It is paid once, so it feels free for eleven months.
4. Servicing and repairs
Scheduled servicing (every 10,000 km or a year for most petrol cars) plus the unscheduled items: brake pads, clutch, battery, air-conditioning gas, wipers, bulbs. Budget 1 to 2 percent of the car's price per year while under warranty and more after. The service history is also the asset you sell with the car; see why missing records cost you at resale.
5. Tyres
A set every 40,000 to 60,000 km. ₹20,000 to ₹40,000 for a hatchback or sedan, more for SUVs. Divide by kilometres and it is 50 paise to a rupee per km that nobody counts.
6. Parking, tolls, washing, registration
Small, recurring and easy to forget. Monthly parking in a big city can rival the fuel bill. Tolls on a daily highway commute add up to thousands a month. Annual registration, pollution checks, inspections: small but real.
7. Finance
If the car is on a loan, the interest is a cost of ownership, not a cost of the car. A ₹8 lakh loan at 9 percent over five years is about ₹1.95 lakh in interest, roughly ₹3,250 a month.
A worked example: India, mid-size hatchback
Assumptions: ₹8 lakh on-road, 12,000 km a year, petrol at ₹105, 15 km/L, five-year ownership.
| Line | Per year | Per month | Per km |
|---|---|---|---|
| Depreciation (to ~45% at year 5) | ₹88,000 | ₹7,300 | ₹7.3 |
| Fuel | ₹84,000 | ₹7,000 | ₹7.0 |
| Insurance | ₹12,000 | ₹1,000 | ₹1.0 |
| Servicing and repairs | ₹15,000 | ₹1,250 | ₹1.3 |
| Tyres (one set in five years) | ₹6,000 | ₹500 | ₹0.5 |
| Parking, tolls, misc | ₹12,000 | ₹1,000 | ₹1.0 |
| Finance interest (₹6 lakh loan) | ₹29,000 | ₹2,400 | ₹2.4 |
| Total | ₹2,46,000 | ₹20,500 | ₹20.5 |
Fuel is a third of the total. The "₹7,000 a month" car costs ₹20,500 a month, and about ₹20 a kilometre, which is roughly what an app cab charges in most Indian cities. That comparison is uncomfortable, and it is the right one to make.
A worked example: United States, compact sedan
$28,000 new, 12,000 miles a year, gasoline at $3.60, 32 mpg, five years.
| Line | Per year | Per mile |
|---|---|---|
| Depreciation | $3,400 | $0.28 |
| Fuel | $1,350 | $0.11 |
| Insurance | $2,000 | $0.17 |
| Maintenance and repairs | $900 | $0.08 |
| Tyres | $250 | $0.02 |
| Registration, parking, tolls | $600 | $0.05 |
| Finance interest | $1,100 | $0.09 |
| Total | $9,600 | $0.80 |
The AAA's long-running "Your Driving Costs" study lands in the same range for this class of car, which is a useful sanity check for your own numbers.
How to work out your own figure
- Pick a twelve-month window that is already behind you.
- Fuel: total from your fuel log. No log? Bank and card statements, filtered by petrol stations, get you close.
- Servicing and repairs: garage invoices. This is the line a service log makes trivial and a glovebox makes impossible.
- Insurance, registration, parking: the annual payments.
- Depreciation: look up what your car would sell for today on a used-car site, subtract from what you paid, divide by years owned.
- Distance: odometer now minus odometer a year ago. If you do not know, your fuel log's odometer readings do.
- Divide the total by the distance. That is your cost per kilometre.
What to do with the number
- Compare it honestly against alternatives. Cab, metro, a second-hand scooter for short trips. For many city households the second car fails this test.
- Watch the trend, not the level. Cost per km creeping up over two years means the car is ageing into expensive repairs, or your fuel economy is slipping for a fixable reason.
- Separate fixed from variable. Depreciation, insurance and finance happen whether you drive or not. Fuel, tyres and some servicing scale with distance. If the fixed costs dominate, driving more is almost free; if variable costs dominate, every trip is a decision.
- Keep the records that raise resale value. Full service history on a five-year-old car is worth real money at sale time and costs nothing to keep.
None of this needs a spreadsheet degree. It needs the receipts in one place, which is the part that goes wrong for most people.
Questions
What is the biggest cost of owning a car?
Depreciation, for most cars under ten years old. It is invisible month to month, which is why people underestimate it. Fuel is usually second, then insurance and servicing.
How do I calculate my car's running cost per km?
Add up a year of fuel, servicing, tyres, insurance and depreciation, then divide by the kilometres you drove that year. Most private cars land between 8 and 25 rupees per km in India and 50 to 80 US cents per mile in the United States.
Does tracking expenses actually save money?
Yes, mostly by catching the slow leaks: falling fuel economy, a garage that quietly got expensive, or a car that is now cheaper to replace than keep. You cannot act on numbers you do not have.
