What Is Total Cost of Ownership (TCO)?
Total cost of ownership (TCO) is the full cost of buying and using something over its lifetime, not just its purchase price. For a car, it includes financing, fuel, insurance, maintenance, repairs, taxes, and depreciation; for a home, it includes mortgage interest, property tax, insurance, maintenance, and HOA fees.
Why It Is Used
Comparing TCO shows when a cheaper purchase price leads to higher running costs, or the reverse.
Example
A car bought for 25,000 might cost another 2,000 a year in fuel, 1,500 in insurance, and 800 in maintenance, and lose value through depreciation. Over five years, the running costs alone would be 21,500 — close to the purchase price itself.
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.