Edmunds.com's True Cost to OwnSM is a proprietary tool that helps you estimate the total five-year cost of buying and owning a vehicle - including some items you may not have taken into consideration. A benefit of using this tool is that you can easily compare the five-year totals for different vehicles and make a more informed choice.
The costs that we estimate include depreciation, interest on financing, taxes and fees, insurance premiums, fuel, maintenance and repairs. In order to estimate certain mileage-dependent costs, we assume that vehicles have been driven an average of 15,000 miles per year. For used vehicles, we calculate mileage using the nominal difference between the current calendar year and the vehicle's model year.
Note that TCO is a comparative tool, not a predictive tool - your actual five-year cost of owning a particular vehicle will vary depending on your personal circumstances, such as your driving history and the number of miles you drive.
How We Calculate True Cost to OwnSM
The True Cost to OwnSM calculations use the following set of assumptions:
Ownership expenses are considered over a five-year time span
You will drive an average of 15,000 miles per year
You are financing the vehicle using traditional financing, not lease financing
You are in the Gold credit tier for the purpose of determining your finance rate
You are putting a 10% down payment on the vehicle at purchase
Your retail contract term is 60 months
You represent the average demographic for insurance rate consideration
Using proprietary formulas, we calculate the five-year costs for the seven cost categories that make up the TCO (depreciation, insurance, financing, taxes & fees, fuel, maintenance and repairs). We take into account widely available manufacturer to customer cash rebates on new cars, which may result in a lower net cost of ownership. However, we do not account for other types of cash rebates or incentives due to the variability in the offers as well as the eligibility rules for such offers.
Explanation of True Cost to OwnSM Terms
Depreciation
This is the amount by which the value of a vehicle declines from its purchase price. The purchase price employed for new cars is the vehicle's True Market Value® price in your state (including typical equipment and destination charge). The purchase price employed for used cars is the vehicle's Private Party True Market Value® price in your state. The resale value assumes the vehicle will be in "clean" condition, will be driven an average of 15,000 miles per year, and will be sold to a private party. Close Window
Insurance
This is the estimated average annual insurance premium being charged by insurers in your state. The premium has been determined based on annual premium data for defined driver profiles and coverages (liability, comprehensive and collision) from the four largest insurers in each state (except Massachusetts, which is based on premium data from one large insurer).
While this information is specific to vehicle make, model, model year and body type, your personal information is not taken into consideration and could greatly alter the actual premium quoted by an insurer. Factors that will affect your rate include your age, marital status, credit history, driving record, and the garaging address of your vehicle. Close Window
Financing
This is the interest expense on a loan in the amount of the True Market Value® purchase price (including typical equipment) plus the destination charge (for new cars) and the base sales tax and initial fees for your state, assuming a 10% down payment and a loan term of 60 months. The interest rate used is the prevailing rate that banks and other direct automotive lenders are charging consumers in your geographic region who are in the Gold credit tier (which encompasses the majority of the car-buying population) of the Edmunds.com Finance Rate Estimator.
Note: Even if you do not finance your vehicle, the inclusion of financing cost in determining True Cost to OwnSM is still appropriate because it reflects the "opportunity cost" of the return you could have made if you had invested the Purchase Price elsewhere. Close Window
Taxes & Fees
Sometimes referred to as DMV fees, this consists of the base sales taxes, license and registration fees in your state, and gas guzzler tax if applicable. These taxes and fees are frequently based on a percentage of the purchase price, and generally decrease as the vehicle ages and loses its value. Note that the average state sales tax that we use includes local and county taxes. Close Window
Fuel
This expense is based on EPA mileage figures, assuming consumption consists of two-thirds highway and one-third city driving, and that the vehicle has an automatic transmission unless automatic is not available. Cost estimates are based on self-service prices, using regular unleaded gasoline for vehicles whose manufacturers require regular; premium unleaded gasoline for vehicles whose manufacturers require premium; or diesel fuel for diesel vehicles. Close Window
Maintenance
This is the estimated expense of two types of maintenance: scheduled and unscheduled. Scheduled maintenance is the performance of factory-recommended items at periodic mileage and/or calendar intervals. Unscheduled maintenance includes wheel alignment and the replacement of items such as the battery, brakes, headlamps, hoses, exhaust system parts, taillight/turn signal bulbs, tires and wiper blades/inserts. Estimated tire replacement costs are supplied to Edmunds.com by The Tire Rack, Inc. Close Window
Repairs
This is the estimated expense for repairs not covered by the vehicle manufacturer's warranties over the five years from the date of purchase, assuming an average of 15,000 miles are driven annually. This expense is based on the cost of a typical "zero deductible" extended warranty for the vehicle, minus the estimated amount of that cost that consists of the warranty provider's overhead and profit. Close Window
Total Cash Price
For new vehicles, the Total Cash Price shown is the vehicle's True Market Value® (TMV) price plus typically equipped options, destination charge, base tax and fees for the state, and, if applicable, guzzler tax; less any widely available manufacturer-to-customer cash rebates. For used vehicles, the Total Cash Price shown is the sum of the vehicle's Private Party TMV® price in "clean" condition, typically equipped options, and base tax and fees for the state. Close Window
Explanation of True Cost to OwnSM Ratings
Operating cost
These are the ongoing "out of pocket" costs of owning and operating a new vehicle: Financing, Insurance, Taxes & Fees, Fuel, Maintenance and Repairs. This rating displays the vehicle's relative ranking in terms of operating costs when compared to other new vehicles. Close Window
Depreciation cost
This is the amount by which the value of a vehicle declines over its first five years, assuming that its initial value (i.e., its purchase price) is its current Edmunds.com True Market Value® price. This rating displays the vehicle's relative ranking in terms of depreciation percentage when compared to other new vehicles. Close Window
About True Cost to OwnSM