Estimating Total Cost of Driving

Interested in how much driving actually costs you? Let’s do some basic analysis and find out – the results may surprise you.

The Answer

If you just want the answer from this example driving costs $6,150 per year, or $0.60 per mile driven. The car payment is less than half the total cost of driving. See the model here:

Driving Assumptions

First we have to enter our assumptions for the calculation.

  • How much is your car payment?   In this example we used $200. You might also have paid off your car, in which case the car payment could be $0 — but average monthly maintenance might be higher.
  • How much is your car insurance? If you pay annually, just divide the amount by 12.
  • How much is car registration? Your inspection? These costs can vary state by state.
  • How much is maintenance per month on average? Think about how oil changes, new tires — it adds up quick.
  • How much does it cost to fill up your tank? How much is gas per gallon? What is your MPG? How many fill-ups do you have per month? This info will help calculate how many miles you drive per year.
  • How much do you pay in parking? You may have to pay to park near your work or school, or even to park at an apartment.


One important piece of analysis is the implied miles driven per year. In our example we estimate driving 10,286 miles per year. Thanks to statistics provided by the US Department of Transportation we know the average American drives 13,476 miles. So, we drive 24% below the average of most Americans. If this seems incorrect we would need to adjust our assumptions. We can also see the break-down of costs by mile driven. In our example it costs an average of $0.08 per mile to be insured, inspected, and registered. This is 13% of our total costs. With the assumptions we made the cost of the car is only 39% of the total cost of driving.

We know we didn’t account for every possible cost. There are extra costs for traffic tickets, or auto accidents. Economists might even want to value the opportunity cost of time you spent driving when you could have done something else. Our goal is just to get a reasonable estimate so we ignored these costs.


I hope this model helped you think about the total costs of driving. Once you factor in compliance costs, fuel, parking, and maintenance driving can get expensive.

Attached Images:
  •  License: Image author owned

Jess is the author of ExcelModelsForSale, a site offering analysis tools for everyday decisions.

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