How to Calculate Your Car’s True Monthly Running Cost

How to Calculate Your Car’s True Monthly Running Cost:- Most people compare cars using only the EMI and fuel cost. The true cost of owning a car is higher. This framework helps you see the full picture.

The components

Fixed costs (you pay these whether or not you drive)

• EMI or the cost of capital if you pay in cash, since the money could have earned interest elsewhere. See car loan basics.
• Insurance premium. See car insurance explained.
• Road tax and registration spread across years of ownership.
• Parking at home or work.
• Depreciation: how much value the car loses each year.

Variable costs (they rise with distance)

• Fuel or electricity: see EV vs petrol for the method.
• Servicing and maintenance: see the service schedule.
• Tyres: see tyre care.
• Repairs, wear parts and washing.
• Tolls and fastag charges.

Step-by-step method

1. Annual distance: estimate how far you drive per year.
2. Fuel cost per year: distance divided by real-world km per litre, multiplied by the fuel price.
3. Servicing per year: use the service centre’s estimate.
4. Tyres per year: the cost of a set divided by the years they last.
5. Insurance per year.
6. Depreciation per year: purchase price minus expected resale value, divided by years of ownership. See resale value tips.
7. Other costs: parking, tolls, repairs buffer.
8. Add all items, then divide by 12 for the monthly cost.

Worked example template

Here is an illustrative template using round numbers. Replace each with your own figures.

Item	Yearly (example)
Fuel (12,000 km at about Rs 7 per km)	Rs 84,000
Servicing and minor repairs	Rs 12,000
Tyres (set cost spread over years)	Rs 6,000
Insurance	Rs 25,000
Parking and tolls	Rs 10,000
Depreciation (example)	Rs 70,000
Loan interest (if any)	Rs 60,000
Total	Rs 2,67,000, about Rs 22,250 a month

Notice that depreciation and interest are as big as fuel for many owners, and they never appear on a fuel receipt.

Cost per kilometre

Divide the yearly total by the distance you drive. In the example above, that is about Rs 22 per km. Compare this number across the cars you are considering.

Ways to reduce the cost

• Drive efficiently. See 12 ways to improve mileage.
• Choose the right fuel type for your usage. See petrol vs diesel vs CNG vs electric.
• Maintain the car well to avoid big repair bills.
• Share trips or use public transport or taxis for rarely used journeys, if the car is used very little.

Frequently asked questions

Is it cheaper to own a car or use taxis?

If you drive little, taxis can be cheaper. Run your numbers and compare per-kilometre cost.

Should depreciation be included?

Yes. It is a real cost, even though you do not pay it monthly. Use it when you decide in new vs used.

Example figures are illustrative only.