How this number is made
Cost per mile puts the fixed bills and the fuel over the miles. Depreciation belongs in the yearly figure if you want it. A car that sits in a driveway has a high cost per mile because the miles are the denominator.
- Payments are the year’s car payment, insurance, and a maintenance reserve.
- Miles are what you drive, not what the lease allows.
Formula
Cost per mile = (yearly ownership + fuel) ÷ miles.
Worked example
With the figures already in the form, per mile is $0.58.
Questions
Should the payment include interest only?
Include the whole payment if you want the cash cost. The principal is still cash leaving. Depreciation is the economic version, and it is different.
What about the down payment?
Spread it over the years you will keep the car and add it to the yearly figure, or leave it out and know the cost is understated.