How to Calculate Cost Per Mile

Cost per mile estimates how much a vehicle costs for each mile driven. It is more useful than fuel cost alone because it can include finance, insurance, servicing, tax, depreciation, and mileage. Use the cost per mile calculator to enter your own running costs.

The short version

The basic formula is:

Cost per mile = total vehicle cost / miles driven

For an annual estimate, add yearly fuel, insurance, maintenance, tax, finance interest, and depreciation. Then divide by annual mileage.

Try it with your own numbers

Use the cost per mile calculator for full ownership costs. Use the fuel cost calculator if you only need fuel for a trip.

How the calculation works

Decide what cost period you are measuring. Annual cost per mile is usually easiest:

• Fuel
• Insurance
• Servicing and repairs
• Road tax or registration costs
• Parking or tolls if relevant
• Finance interest or lease costs
• Depreciation

Then divide the total by miles driven in the same period.

A worked example

Suppose annual costs are:

• Fuel: 1,800
• Insurance: 900
• Servicing and tyres: 700
• Tax and fees: 250
• Depreciation: 2,500
• Annual mileage: 10,000

Total annual cost is 6,150. Cost per mile is 6,150 / 10,000 = 0.615, or about 62p per mile.

Watch-outs

• Counting fuel only.
• Forgetting depreciation.
• Mixing monthly costs with annual mileage.
• Ignoring finance interest or lease fees.
• Using optimistic mileage that does not match real use.

How to read the result

Use cost per mile to compare cars, estimate commute cost, price business mileage, or understand whether a cheaper purchase price is really cheaper to run. The result is an estimate because future repairs, fuel prices, insurance, and resale value can change.

Tools mentioned in this article

• Fuel cost calculator
• Car depreciation calculator
• Car loan payment calculator
• Car affordability calculator

Reader questions

Should depreciation be included?

Yes, if you want true ownership cost. Fuel-only cost per mile is useful for trips, but it misses a major cost.

Should I use miles or kilometres?

Use whichever unit matches your records, but keep the same unit across distance and result.

Why does low mileage make cost per mile higher?

Fixed costs such as insurance and tax are spread across fewer miles, so each mile carries more of the annual cost.

Is cost per mile the same as reimbursement rate?

No. Reimbursement rates may be set by policy or tax rules. Cost per mile is your estimate of actual cost.