Choosing how to get around directly affects your budget. The most common mistake is comparing only the visible price: the car installment, the bus fare, or the app ride.
Total cost of ownership (TCO) brings together everything that comes in and out over time. For those just starting out, this view avoids decisions based on incomplete numbers.
What TCO is and why it changes the comparison
TCO is the sum of all costs linked to a mobility option, spread over time. It is not a complicated calculation; it is an honest list.
With a private car, TCO includes items that do not show up every month. With apps and public transportation, the risk is underestimating frequency and extras.
Owning a car: beyond the installment
Owning a car usually starts with the payment, but that is only the entry point. In TCO, there are predictable costs and others that vary with use.
- Acquisition: down payment, installments, or consortium share - Depreciation: loss of value over the years - Taxes and fees: IPVA, licensing - Insurance: monthly or annual - Maintenance: services, tires, parts - Use: fuel, parking, tolls, washes
Even when fully paid off, a car continues to generate expenses. That is why TCO looks at the entire period, not just the current month.
Ride-hailing apps: the variable that seems small
Apps have no down payment or annual tax, which creates a sense of savings. The TCO shows up when real usage is added up.
- Daily rides (round trip) - Surge pricing hours - Tips, fees, and cancellations - Add-ons: luggage, long trips, trips outside the usual area
A good test is to calculate the average monthly spend in three scenarios: a typical week, an atypical week, and a full month. The difference is often surprising.
Public transportation: low cost, frequent extras
Buses, subways, and trains tend to have the lowest direct cost. Still, TCO is not just the fare.
- Tickets or monthly passes - Paid transfers - Complementary trips (apps or taxi) - Travel time converted into indirect cost (delays, waiting)
Here, the greatest weight is usually predictability: when the route is stable, TCO becomes more manageable.
How to build a simple calculation in 15 minutes
You do not need a complex spreadsheet. A rough draft already helps with the decision.
Step by step
- Define the period: 12 months works well for beginners - List all possible costs of each option - Add up the annual total - Divide by 12 to get the average monthly cost
Compare the final values, not the individual lines. The higher number is not always the least advantageous for your use.
Common mistakes made by beginners
Some slips distort the comparison and make TCO lose meaning.
- Ignoring car depreciation - Considering only the best month of app usage - Forgetting small, recurring costs - Comparing atypical months (vacations, events)
When each option tends to weigh less on the wallet
Without ready-made formulas, it is possible to observe patterns:
- Long, daily, and predictable use tends to favor public transportation - Occasional and irregular use tends to favor apps - Frequent use with multiple destinations may justify owning a car
TCO does not decide for you, but it puts all the cards on the table. The choice becomes clearer when the calculation is complete — and honest.
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