INVESTIGATION · WHAT AN ASSET COSTS
Your car does not cost you $289 a month
The loan instalment is the visible half. Counting depreciation and interest, the real cost reaches $525 a month — of which $221 you never see go past.
By the Yoseri News desk · · 7 min read
What does your car cost you? Nine times out of ten, you answer with your instalment. It is the only figure that shows up on your statement — and it is less than half what it really costs you.
The full calculation
Take an ordinary case, and swap in your own figures: a car bought for $22,400 in 2023, financed, worth $14,200 today, with $8,400 of loan left at 6.90%.
| Item | Per month | Per year |
|---|---|---|
| Depreciation | $180 | $2,160 |
| Loan interest | $41 | $486 |
| Insurance | $82 | $984 |
| Fuel | $126 | $1,508 |
| Servicing and tyres | $68 | $820 |
| Registration | $28 | $340 |
| Total | $525 | $6,298 |
The $289 monthly instalment covers barely more than half the bottom line. And of those $525, $221 never cross your account: depreciation and interest go out without ever appearing as an expense.
Depreciation, the invisible expense
It is the biggest line in the table, and the only one no statement will ever show. A car loses about 24% in the first year, then roughly 12% a year. Over three years, the example above lost 36.6% of its value — $8,200 gone without a single debit.
The good news: depreciation slows, while the loan comes down at a steady pace. It is that crossover that lifts your equity every month.
The waterline of a car loan
In our case the car is worth $14,200 and the loan stands at $8,400: equity is positive by $5,800. Many car loans go under that line after two years: your value falls faster than your balance, and you then owe money on an asset worth less than your debt.
It is not a disaster as long as you do not sell and nothing happens to it. It becomes one in both cases.
The cost per kilometre
Over roughly 11,400 kilometres a year, the $6,298 annual figure gives $0.55 a kilometre. That figure is the only one that allows a real comparison: with a transit pass, with a car-sharing service, or with the business share you can deduct.
On a business share of 18% of the kilometres, the potential deduction reaches $1,134 a year. It still has to be measured — and justifiable.
What it does not say
This calculation does not tell you whether to keep your car, sell it or replace it. It gives you things that do not fit in a table: a schedule, independence, a region where public transport does not exist.
It tells you only one thing, but it says it precisely: your real price is not the price of your instalment.
And for you, what does that mean?
Add up the six lines for your own vehicle. If the total exceeds what you thought by a third, you are about average. Then compare with the cost per kilometre — that is where the decision becomes legible.
Yoseri does this addition on the Accounts and net worth page, with the revalued figure, the loan balance and the real equity. The value shown is an estimate from a depreciation curve: its source and its date are written down, rather than passing an assumption off as a fact.
Where the figures come from
The maths in this article starts from the assumptions written above. Run them again with your own figures — you should land on the same numbers.
Yoseri News is an educational publication. Nothing in this article is investment advice, a recommendation to buy or sell, or tax advice. Yoseri is registered as neither an adviser nor a dealer with any market authority.