This free online Car Buying Calculator will calculate the annual, monthly, and per mile cost of buying, owning, and operating an automobile. You just might be shocked at how much it costs to own and operate a motor vehicle if you account for all of the expenses that come attached to the purchase.
Plus, unlike other car buying and car financing calculators, the car buying calculator on this page will also calculate the number of hours you will need to allocate to working in order to stay current with the costs of ownership. I hope you enjoy your work.
When you are looking to buy a car do you only consider the monthly payment when deciding whether or not you can afford to purchase the car? If so, your "personal finance" luxury liner stands a good chance of meeting the same fate as the Titanic.
The moment you sign on the dotted line of an automobile title, you immediately obligate yourself to a host of costs that come attached to the price tag. Let's briefly discuss each cost before we use the car buying calculator to expose and size up the costs that are located beneath the surface of an auto purchase.
In addition to the purchase price of the car, you can also expect to be charged sales tax (if applicable) as well as your initial title transfer and license fees. Sadly, many people simply add these costs to the financing package, meaning they will be paying interest on these upfront fees for years to come.
This is the most important, yet most overlooked and least understood of all costs associated to buying and owning a vehicle -- or any other depreciable asset for that matter.
In case you don't know what "depreciation" is, depreciation can be defined as the amount by which an asset wears out (or progresses toward becoming obsolete) for a given period of time.
Or to put it another way, depreciation is the drop in resale value (what you can sell the asset for) for a given period of time. Typically an asset depreciates at a faster rate when it's newer, and at a slower rate as it becomes older.
As it relates to an auto purchase, the value of the monthly depreciation of a vehicle is equal to the amount you should be setting aside in order to replace the vehicle once it has reached the end of its useful life.
If you're not setting aside a vehicle's depreciation as it occurs (which is over above any auto loan payment you're already making), guess what you will have to do when it's time to replace the vehicle? Yep, you're going to have to continue to pad the huge bonus checks being paid to the lending institution executives.
But wait! It's not enough to know what depreciation is, you must also understand the difference between two types of depreciation. In addition to normal depreciation that occurs as an asset wears out or becomes obsolete, there is also a type of depreciation I refer to as Warp Speed Depreciation.
Warp speed depreciation is the type of depreciation that occurs the moment something goes from being "new" to being "used." The instant you sign the papers to become the proud owner of a brand new car, the brand new car becomes a "used" car and the resale value plummets by as much as 20% of the purchase price!
This means that the absolute worst thing you can do is to buy a brand new vehicle every 1-2 years. That's because your average annual cost of depreciation will likely run in the 20% range, whereas buying a new car every ten years, or a used car every two years, may lower your average annual cost of depreciation to under 10%.
If you want to see for yourself just how drastic of an effect depreciation can have on your potential future wealth, be sure to experiment with various new and used car buying scenarios using the Car Depreciation Calculator.
If you finance a car purchase, you will increase the cost of the car by the amount of the interest charges that will be tacked on to the principal borrowed.
Of course you will also need to make insurance premiums on your car. Typically the more expensive and more sporty the car the higher your insurance premiums will be. Even higher if you are forced to purchase full coverage in order to qualify for financing.
The more you drive your car, the more it will cost you to fuel the vehicle. If you want to calculate MPG and compare car gas mileage expenses, be sure to try out the Fuel Mileage Calculator.
On average you can expect to pay 3% of the purchase price per year to repair and maintain your car (less in early years, more in later later years). If you do the repairs and maintenance yourself, the cost would be what your time is worth if you used that time to earn an income.
If you park your car in a garage, any utilities attributable to the garage -- along with the depreciation of the garage structure and fixtures -- is all part of the cost of owning the automobile.
Everything you own that can wear out or become obsolete, is doing so at this very moment. If it were possible to install a cost of ownership meter on your life, you would be shocked at how much value the whole of your possessions lose on a daily basis. Unfortunately these costs accrue without a meter to track them, and only come into light as each asset needs replacing.
When it comes to buying and owning assets that wear out or become obsolete, the bottom line is that if you are not setting aside money to replace these items as they wear out, your financial net worth is likely losing ground, not gaining ground.
Finally, once you become fully aware of the costs associated to buying and owning depreciable assets, you also need to realize that in order to pay for these costs, you must trade free time for work time. In other words ...
With that, let's use the Car Buying Calculator to calculate the annual, monthly, and per mile costs of buying and owning a vehicle. Note that you can use the car buying calculator to compare the costs of one car to another, or simply as a cost calculator to purchase a car.
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Real Hourly Wage (optional): If you would like the car buying calculator to calculate the number of hours you will have to work each year to stay current with the costs of ownership, enter your real hourly wage in this field. Clicking on the link will open the Real Hourly Wage Calculator in a new window.
Total price of the car, including options: The total price of the car. If your are buying a new car, include the price of all options and add-ons.
Applicable sales-tax percentage: The total percentage of all sales tax rates that will apply (local, state, etc.). Enter the amount as a percentage (for .07375, enter 7.375%).
Annual cost of licensing this vehicle: Generally speaking, the more expensive the vehicle the higher annual license will be.
Extended warranty cost, if applicable: If you purchase an extended warranty, enter the price on this line. Keep in mind that an extended warranty is just an insurance policy. Meaning, like all insurance policies, the issuer of the policy has calculated that you will not have any trouble with the car until after the extended warranty expires.
Will you be financing this vehicle?: Select yes or no to indicate whether or not the car buying calculator should include finance costs in its calculations.
Amount of your down payment: The amount of your down payment if you are financing the vehicle. The car buying calculator will subtract this entry from the purchase price to arrive at the amount to finance
Financing rate (APR): The annual percentage rate you will be charged by the auto finance company. Enter as a percentage (for .095, enter 9.5%).
Number of months financed: The term of the car loan in months (3 years = 36, 4 years = 48, 5 years = 60, 6 years = 72, and so on.
Annual insurance premium: The dollar amount of the annual insurance premium. Call your auto insurance agent for a quote. Typically the more expensive and the more sporty the vehicle, the more it will cost to insure.
Miles you expect to drive car per year: The number of miles you think you will drive the car per year. The car buying calculator will use this figure to estimate your fuel costs and per mile cost to operate.
Vehicle's estimated MPG rating: The average number of miles per gallon (MPG) you will get from the vehicle. If two mpg ratings are stated, enter the lower of the two. The car buying calculator will divide the number of miles per year by the price of one gallon of gasoline to arrive at your annual fuel cost.
Local cost of one gallon of gasoline: The current cost of one gallon of gasoline purchased locally. I suggest inflating this figure since the cost of gasoline is always inching higher over time.
How many years old is the car?: The age of the car in years. The newer the car, the faster the car will depreciate in value during the first years of ownership. The car buying calculator will the current age as the starting point to calculate depreciation. If the car is new, enter a zero.
Years you expect to own this car: The number of years you plan to own the car. The longer you own the car, the lower will be the average annual cost of depreciation. The car buying calculator will use this figure as the final year to depreciate the vehicle.
Monthly maintenance & repair cost: The monthly cost to repair and maintain the vehicle. If you are not sure, use the online pocket calc in the right hand column of the page to multiply the cost of the vehicle by .03 to arrive at an estimate (3% of purchase price per year). Newer cars tend to have a lower annual cost, whereas older cars tend to have a higher annual cost.
Tax, license, extended warranty costs: This is the total of all upfront costs associated to the purchase of the vehicle that are over and above the price tag.
Depreciation costs: This is how much the car may depreciate (decrease in value) between now and when you sell or trade the vehicle. The annual depreciation rates used by the car buying calculator, which are intentionally set to estimate depreciation costs high, are as follows:
|Age of Car in Years||Depreciation Percentage|
Finance costs: This is the total finance charge you can expect to pay if you finance the vehicle at the loan terms you entered in the top section of the car buying calculator.
Insurance costs: This is the total of your annual premiums for the time you expect to own the car.
Fuel costs: This is the total cost of gasoline between now and when you plan to sell or trade-in your vehicle.
Maintenance & repair costs: This is the total estimated maintenance and repair costs between now and when you plan to sell or trade-in your vehicle.
Total cost of buying & owning the car: This is the total of all previous result fields and represents the estimated cost to purchase and own the vehicle between now and when you plan to sell or trade-in your vehicle.
Annual cost to own & operate vehicle: This is the total cost of purchasing and owning the vehicle divided by the number of years to plan to own the vehicle.
Monthly cost to own & operate vehicle: This is the annual cost of purchasing and owning the vehicle divided by 12 months.
Car cost per mile: The car buying calculator arrives at this figure by dividing the total annual cost by the number of miles you expect to drive the vehicle each year.
Required annual work hours: This is the average number of hours per year you will need to allocate to working in order to pay the annual costs of owning and driving this vehicle.
Required annual 40-hour work weeks: This is the average number of 40-hour work weeks per year you will need to allocate to working in order to pay the annual costs of owning and driving this vehicle.