The True Cost of Owning a Car Per Mile, and How Annual Mileage Changes It
October 29, 2026
Most people think of fuel when they think of driving costs, but fuel is often under a quarter of the total. Car ownership has fixed costs that you pay whether you drive or not (depreciation, insurance, registration, financing) and variable costs that depend on mileage (fuel, maintenance, tires). Adding them up and dividing by the miles driven gives the true cost per mile.
Consider a car bought for $28,000, driven 12,000 miles a year. Depreciation averages $3,200 a year, insurance is $1,800, registration and fees are $300, and interest on the loan is $900. Fixed costs: $6,200. Fuel at 30 mpg and $3.50 a gallon costs $0.117 a mile ($1,400 a year), and maintenance and tires add $0.10 a mile ($1,200). Variable costs: $0.217 a mile.
Skip the math and get your answer instantly:
Open the Loan Calculator →Annual and Per-Mile Totals
At 12,000 miles: fixed $6,200 plus variable 12,000 × $0.2167 = $2,600 gives $8,800 a year, which is $733 a month and $0.733 per mile. The fixed share (70%) means that the average cost per mile falls as you drive more, but the total goes up. At 6,000 miles, the total is $6,200 + $1,300 = $7,500, or $1.25 per mile. At 20,000 miles: $6,200 + $4,333 = $10,533, or $0.527 a mile. The marginal cost of an additional mile, the cost you actually save by not driving it, is only the variable cost of about $0.22 (plus some added depreciation for mileage).
In reality, depreciation also depends on mileage and age, so heavier drivers pay somewhat more for it.
| Annual miles | Fixed costs | Variable costs | Total per year | Cost per mile |
|---|---|---|---|---|
| 6,000 | $6,200 | $1,300 | $7,500 | $1.25 |
| 12,000 | $6,200 | $2,600 | $8,800 | $0.73 |
| 20,000 | $6,200 | $4,333 | $10,533 | $0.53 |
Compare With Alternatives
If you drive 6,000 miles a year, the car costs $7,500, or $625 a month. Ride-hailing at $2 per mile plus a $3 base for 600 trips of 10 miles would cost 600 × ($3 + $20) = $13,800 for 6,000 miles, much higher, but at 2,000 miles a year, the ride cost is $4,600 versus the car's roughly $6,600. A rental or car-share used for 20 days a year at $60 a day costs $1,200. Break-even depends on your trips, so calculate with your actual numbers. Transit passes and occasional ride-hailing can beat ownership for people who drive very little.
Reducing Cost per Mile
The largest levers are the purchase price and holding period: depreciation is steepest in the first three years, so buying a 3-year-old car, then keeping it for 8 to 10 years, lowers annual depreciation. Shop insurance yearly. Keep tires inflated and maintain the car to protect fuel economy. Drive more efficiently. Avoid long loan terms with high interest rates. A 10% improvement in fuel economy saves about $140 a year in this example, which is less than shopping for insurance.
Using the Number
Use cost per mile when deciding on a commute, a job location, or whether to buy a second car. A second car with 3,000 miles a year faces the same fixed costs of $6,200, or about $2.07 per mile fixed alone. Reimbursement rates such as the IRS mileage rate are designed to reflect an average of such costs. Compare your own calculation with the published rate.
Frequently Asked Questions
What are fixed and variable car costs?
Fixed costs (depreciation, insurance, registration, financing) are paid regardless of driving; variable costs (fuel, maintenance, tires) depend on miles.
Why does cost per mile fall as I drive more?
Because fixed costs are spread over more miles.
What is the cost that I save by not driving a mile?
Mostly the variable cost, about 22 cents in this example.
How can I reduce depreciation?
Buy a used car a few years old and keep it for a long time.
When is ride-hailing cheaper than owning?
When you drive very few miles a year.