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Calculate Your Car’s Cost Per Mile

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A few years ago, with my last car, I did a little calculation to help determine the “cost per mile.” I was doing quite a bit of driving back and forth from Baltimore to Pittsburgh, then Baltimore to New Jersey, to visit my girlfriend (now by wife, so I suppose it was worth it :) ) and so this number was important for me to know. I also found that it helped make other decisions in my life easier because it gave me a very tangible cost associated with driving somewhere, such as to the gas station across town instead of the gas station on my route home.

The Calculation

The cost per mile can be broken up into three major categories and one catch-all:

  • Gas: Clearly the dominant value in the calculation, gasoline is something that has to be based on actual costs rather than estimated costs. You can’t take the cost of gasoline, the EPA value for your car’s mileage, and figure out based on that. Ignoring the inaccuracy of EPA values, though they’ve made a push to make them more accurate, your car is probably not the standard car. You have crap in your trunk, your tires are probably not inflated perfectly every single drive, and your maintenance isn’t going to be perfect (get that 30,000 mile checkup exactly at 30,000 miles?). So, keep a log for five fill-ups, reset your B trip odometer, and calculate your gas cost per mile that way.
  • Insurance: This value is easy, simply take your premium and divide by the number of miles you drive in a given year. The “rule of thumb” is around 15,000 miles a year, but if you have an especially long commute then you can increase that. You can always just throw in a guesstimate because what you use as your miles driven per year isn’t going to drastically affect this number. For example, if you pay $2,000 a year and you drive 15,000 miles, that’s 13.3 cents a mile. At 20,000 miles a year, it’s 10 cents a mile. Sure the difference is 33% but you’ll ultimately use this value for trips in the tens or hundreds of miles… meaning a difference of only 30 cents – $3.
  • Tires: Depending on how expensive your tires are, you might want to go through with this calculation or just consider it part of the noise. I know tires say they can last 30,000 miles, but I believe most of my tires run only maybe 20,000 miles. Either way, this math should be pretty simple. Divide the cost of the tires by the mileage and add it to the running total you’ve been using.
  • Everything Else: I always throw in an extra 3-5 cents to cover everything else, from windshield wiper blades to routine maintenance to oil changes. I figure that a $20 oil change put across 3,000 miles (I actually changed my own oil with synthetic but do it once every 10,000 miles) is small enough to be considered noise in the equation so I use the 3-5 cents catch-all value.

So, what’s the final number? The IRS business mileage deduction is 50.5 cents a mile, how close was your value to this one? When I did this calculation a few years ago, I found my value was close to the mileage deduction back then (it was 40-something cents) but that was before the spike in fuel prices. For comparison’s sake, my value for gasoline back then was 7 cents a mile based on a car that was running around ~32 miles to the gallon (Acura Integra and I was doing a significant amount of highway driving).

How do you use this number? Let’s say it’s 280 miles between my home in Maryland and my parent’s in New York. The tolls between Maryland and New York, I believe, are around $60 a round trip. Given the cost of fuel alone (7 cents a mile), the cost of the trip is over $100 compared to the cost of a Southwest flight that can be bought for $39 a round trip. So, driving alone would cost over a hundred dollars and nearly 5 hours – flying would cost ~$100 and 3 hours… it’s a no brainer and the math is facilitated by knowing the cost per mile.

Finally, your car’s cost per mile is only part of the story. In my drives to Pittsburgh or to New Jersey, tolls played an important role and often threw the entire equation out of whack. Back then, the toll for the Pennsylvania Turnpike was around $8 a round trip and nearly $50 a round trip to New Jersey. Another factor was time. I could take a $15 Chinatown bus from Baltimore to Grand Central in NYC, then jump on an Amtrak train out to New Jersey… but it would take me like 15 hours to make the trip and time is money! (and back then, that was time I could spend with my beautiful soon-to-be wife, and yes she reads this blog)

{ 12 comments, please add your thoughts now! }

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12 Responses to “Calculate Your Car’s Cost Per Mile”

  1. dha says:

    Not bad, but how about a grand total cost-per-mile or per month calculation based on absolutely everything you pay for with a car? Including the car itself? Here’s how I do mine:

    Car purchase price: $6000
    Miles per year: 14,000
    Est. miles left in car at time of purchase: 70,000 (130k start > 200k)
    So car will last me: 5 years

    Now we just write out the annual numbers

    Car acquisition: $6000/5 = $1200
    Fuel: 14,000 miles /24.5 mpg = 571 gal * $3.00/gal = $1714
    Insurance: $300/6 months = $600
    Registration: $150
    Maintenance: $1000
    ———-
    Total: $4,664
    Per Month: $389
    Per Mile: $0.33

    I’m half way through my five years, and everything is right on track. And that’s even with a recent $1700 bill from a shattered idler pulley which resulted in a seized timing belt which bent 9 valves!

    Curious to see how this would look for a new car.

    • Jerry ONeal says:

      Would like to see cost per mile on a new car (have not bought yet).
      I drive 100 to 150 miles per day, five days per week. I deliver medical records. I receive $.55 per mile. I need to factor all car related costs and decide which car to purchase new. Toyota Yaris, Hyundi Accent, Volkswagen Golf TDI.
      Thanks!

    • Sean says:

      What about resale value? shouldn’t you factor that in?

  2. Jesse says:

    Ouch: $1.03 per mile :(

  3. Jesse says:

    I should add thats an 07 Z, at 17 mpg

  4. Not as bad as I would have thought, thanks for the maths.

  5. Scott says:

    Some people also factor in the loss of a car’s value when doing this calculation, because for every thousand miles you put on your car the value drops some. I’ve heard many quote this around 10 cents per mile ($100 loss for every 1000 miles). This is why it makes sense sometimes to rent a car for driving trips if the price is right and the distance long enough because then you’re just paying for gas and the flat rental rate as opposed to devaluing your car and possibly having to make more frequent oil changes, tire changes, and other maintenance (and for older, or crappier, cars on long trips you save yourself the risk of being stranded on the side of the road).

  6. Daniel says:

    Insurance should not be included if your calculating the cost of a trip. You will be paying for insurance whether you drive your car or not. Also, what needs to be here but isn’t is the cost of the deprecitiation of your car due to the miles you put on it, which is probably the most significant cost.

  7. Jason says:

    for calculating cost comparisons, eliminate the insurance, registration, and other fixed costs that you have to pay regardless…

    The difficulty is determining depreciation, as well as the varying costs of repairs depending upon your specific car.

  8. Sam says:

    Most helpful!! Thank you!!

  9. jer says:

    i think the most common & safe numbers for everyone would be:
    gas
    oil changes
    insurance
    registration and inspection renewals
    tires and breaks

    and then throw in 5 cents per mile for everything else. for those who actually own the vehicle, it is easier to just forget about depreciation, and there is no interest from financing

  10. seriously_dave says:

    Cost Benefit Analysis

    Roger Frugalmen

    Roger has two job opportunities to choose from:

    He will earn $18.00 an hour for his family
    driving 31.4 miles one way to a quality printing job up north.

    Or, he can work at an entry level lower paying job that is near his home for $11.55 an hour.

    I Ask you?

    What should Rogers choice be?

    the answer is obvious, Right?

    Lets Examine the FACTS.

    Always remember:
    “what looks good is not always good for you.”

    Lets figure his actual driving cost.
    since he is a Frugalman, he wants to be precise, he empties his gas tank and pours in exactly one gallon of gas for a test,

    Roger finds that his vehicle is getting 17 miles per gallon.

    THE FACTS: work only!

    Roger gets 17 miles to the gallon. x 62.8 miles a day @4.00 a gallon = 14.78

    Vehicle depreciation – 62.8 miles a day. @ .35 cents per mile vehicle depreciation value = 21.98

    tolls – $1.90×2=3.80 1 way or 7.60 a day

    Insurance $4 a day

    TOTAL = $48.36 a day

    Roger has to pay $48.36 a day? to go to work. or….

    if divided by his 8 hour work day = -($6.45 per hour)

    literally ($6.45) is the actual hourly loss for the “privilege” of driving to and from work everyday.

    Thats each hour of his work day!

    …or Here is an even more interesting way to look at it.

    the first 2.69 hours of each day is the cost of wasting three to four hours of his own time for the “privilege” of destroying his own car.

    (3 to 4 hours is the wasted drive time to and from his employment.)

    Now understand that this cost analysis does not include the following:

    It does not include:

    Tickets, parking fees and traffic light fines,
    car wash, food eaten and beverages consumed at a cost while driving?
    hours extra a day of drive time? This is huge!

    It does not include the wasting of time 3 to 4 hours a day in traffic.

    Roger could be spending that time with his family or he could utilize this time as over time?

    Overtime is usually time and a half according to law.

    Could it get any worse then this?

    lets do some numbers:

    21.00 – 6.45 = $14.55
    20.00 – 6.45 = $13.55
    19.00 – 6.45 = $12.55
    18.00 – 6.45 = $11.55

    11.55 x 40 = $462.00 + 20 hours OT = $346.50 = 808.50 or 13.47an hour

    = to $20.00 an hour northern rate.

    The US Department of Transportation reports that on average a typical passenger car is on the road for about 12 years or 128,500 miles.

    which comes to 10,708 per year.

    now if Roger is driving up north everyday at 31.4 miles one way then his car will last approx. 8.5 years according to these government statistics.
    thats (3.5 years less) value lost!

    If Roger takes the job up north he not only loses ($48.36) a day or ($6.45) an hour, but he also loses 3.5 years of car value ….this is huge!

    Now Lets examine Rogers low paying start out IT Job.
    lets analyse this scenario:

    Roger drives to work 4.25 miles one way… to his lower paying but wonderfully fun low stress IT Job, doing what he loves to do. Computer Technology!

    gas – 17 miles to the gallon. x 8.5 miles a day @4.00 a gallon = $2.00
    auto depreciation – 8.5 miles a day. @ .35 cents per mile depreciation = $3.00
    tolls – 0
    Insurance $1 a day
    TOTAL = $6
    divided by 12 hours (Roger chose to work the wasted hours as overtime) = -$.50 an hour

    remember:
    11.55 x 40 = $462.00 + 20 hours OT = $346.50 = 808.50 or 13.47an hour

    13.47 – .50 = 12.97 right?? wrong! heres why. Lets do more math!

    don’t forget the car value of 37,478miles x .35 = $13,117.30 = $15.62 extra a day

    divided by 8 hours a day = $1.95 extra saved value + 12.97 = $14.92

    grand total of $14.92

    for the next 3 years,
    grand total of $14.92 hr

    chart:

    north near home
    job job

    22.00 – 6.45 = $15.55
    21.37 – 6.45 = $14.92 – Rogers value
    21.00 – 6.45 = $14.55
    20.00 – 6.45 = $13.55
    19.00 – 6.45 = $12.55
    18.00 – 6.45 = $11.55

    Working near home Comparison Value is equal to $21.37 northern pay.

    leave comments…


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