This calculator and its content have been reviewed for accuracy by David Chen, CFA.
Understanding the true “Cost to Drive Per Mile” (CPM) is essential for budgeting, travel planning, and making informed decisions about vehicle ownership. Use this calculator to accurately tally your annual driving expenses and divide them by your yearly mileage.
Cost to Drive Per Mile Calculator
Cost to Drive Per Mile Calculator Formula
Formula Source: NerdWallet – Cost of Car Ownership Analysis | IRS Standard Mileage Rates Guidance
Variables Explained
- Total Annual Mileage (Miles): The total distance (in miles) you drive your vehicle in one year. This is the denominator in the CPM calculation. Must be greater than zero.
- Annual Fuel Cost ($): The estimated total amount spent on gasoline or other energy sources for the vehicle in a year. This is a variable cost.
- Annual Maintenance & Repairs Cost ($): All variable costs associated with keeping the car operational, including oil changes, tire rotations, unscheduled repairs, and new tires.
- Annual Insurance, Registration & Fees Cost ($): The total fixed cost of mandated liability, comprehensive insurance, state registration tags, and any annual taxes.
- Annual Depreciation or Loan/Lease Cost ($): The most significant fixed cost, representing either the loss of vehicle value (depreciation) or the cost of financing/leasing the vehicle.
What is Cost to Drive Per Mile?
The Cost to Drive Per Mile (CPM) is a crucial metric that defines the true operational expense of your vehicle for every mile you travel. It aggregates all costs—both fixed (like insurance and depreciation) and variable (like fuel and maintenance)—and spreads them across the total miles driven annually. This number provides a clearer picture of car expenses than simply looking at the monthly payment or the price at the pump.
Knowing your exact CPM is essential for several financial decisions. It allows you to accurately compare the costs of different transportation methods (e.g., driving vs. public transit or ridesharing), justifies whether an upgrade to a more fuel-efficient vehicle is worthwhile, and provides the base rate for calculating deductible business travel expenses. Without a precise CPM, personal and business budgeting for transportation costs is often significantly underestimated.
How to Calculate Cost to Drive Per Mile (Example)
- Determine Annual Costs: Add up all annual expenses. Assume: Fuel ($2,400) + Maintenance ($800) + Insurance/Fees ($1,500) + Depreciation/Loan ($3,000) = Total Annual Cost of $7,700.
- Determine Annual Mileage: Estimate or track your total distance driven. Assume 15,000 miles.
- Apply the Formula: Divide the Total Annual Cost by the Total Annual Mileage. $7,700 / 15,000 miles.
- Final Result: The resulting Cost Per Mile is approximately $0.5133, which is 51.33 cents per mile.
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Frequently Asked Questions (FAQ)
Why is Depreciation considered a cost? Depreciation is the loss of value your car incurs over time. Even if you paid cash and have no loan, that lost value is a real economic cost of using the vehicle. If you sell the car, you will receive less money because of the miles you drove.
How can I find my accurate annual mileage? If you don’t track it precisely, check your past vehicle service records or insurance policies. Most drivers average between 10,000 and 15,000 miles per year, but tracking your odometer reading over one month and annualizing the result provides a more accurate estimate.
What is a ‘good’ Cost Per Mile? There is no single ‘good’ rate, as it depends heavily on your vehicle type (e.g., luxury SUV vs. compact sedan) and local gas prices. However, the IRS standard mileage rate (used for tax deductions) often serves as a benchmark for average total costs, including depreciation.
Does this calculator include tolls and parking? Tolls and parking are typically highly variable based on individual trip patterns and are usually excluded from standard CPM calculations. We recommend adding these as separate line items in your overall budget, not in the Annual Maintenance input.