Updated: August 21, 2024
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The average cost of owning a car in the U.S. has risen to $12,182 per year ($1,015 per month), according to a 2023 American Automobile Association (AAA) report. This marks a significant 13% increase from the 2022 average of $10,728 annually ($894 per month). Growing expenses across categories like fuel, insurance and maintenance have contributed to this rise.
Factors such as vehicle type and usage heavily influence the total cost of ownership, so it’s important to account for all potential costs before purchasing a vehicle. Understanding these expenses helps you determine whether owning a car fits within your budget and financial plans.
Cost of Car Ownership Fast Facts
The numbers don't lie — owning a car can get expensive.
Owning a car costs an average of $12,182 per year or $1,015 monthly.
The cost of owning and maintaining increased 13% from 2022 to 2023.
The costs of owning a car include the purchase price, gas prices, annual insurance, finance charges, depreciation, license and registration fees and vehicle maintenance.
The average total cost per mile rose to 81 cents in 2023 from 72 cents in 2022.
Average Annual Cost per Vehicle Type
The average cost of car ownership varies significantly depending on the type of vehicle you drive. Generally, the larger the car, the higher the total cost of ownership due to increased expenses for maintenance and fuel.
According to AAA, half-ton pickups have the highest annual maintenance cost at $15,858, whereas small sedans are the least expensive at $8,939 per year.
Vehicle Category | Annual Average Cost to Maintain |
|---|---|
Small Sedan | $8,939 |
Medium Sedan | $11,048 |
Subcompact SUV | $9,718 |
Compact SUV | $10,066 |
Medium SUV | $11,971 |
Mid-Size Pickup | $12,258 |
Half-Ton Pickup | $15,858 |
Hybrid | $9,650 |
Electric | $10,112 |
Note: Costs are calculated based on 15,000 miles driven annually.Source: American Automobile Association.
Car Costs Breakdown
The cost of owning a car extends beyond loan payments and fuel. Insurance, license and registration fees, maintenance and other expenses all contribute to the total cost of ownership.
Below is an overview of the average costs associated with car ownership. Accurately accounting for these expenses helps you stay on top of your budget.
Category | Cost | Description |
|---|---|---|
Depreciation | $4,538 loss in value/year | Annual decrease in your car’s value, calculated based on the difference between what you paid for it and its estimated trade-in value after five years and 75,000 miles. |
Finance | $1,253/year | Annual cost of a five-year car loan, assuming a 10% down payment and the average national interest rate. It includes taxes and the first year’s license fees. |
Fuel | 15.93¢/mile | Average cost of fuel, based on a 12-month period ending in May 2023. For gasoline vehicles, it assumes a regular-grade gas price of $3.99 per gallon. For electric cars, it considers a charging cost of 15.8 cents per kilowatt-hour. |
Insurance | $1,765/year | Annual cost of a full coverage insurance policy for a typical driver — someone under 65 years old with over six years of driving experience, no accidents and living in a suburban or urban area. |
License, Registration & Taxes | $762/year | All the government fees and taxes you pay when you buy a car, as well as the annual costs to keep it licensed and registered. |
Maintenance, Repair & Tires | 9.83¢/mile | Includes the cost of routine maintenance, repairs for wear-and-tear items and one set of replacement tires over five years. It also factors in a comprehensive extended warranty. |
Source: American Automobile Association
How to Calculate the Annual Cost of Car Ownership
To calculate the total cost of owning a car, consider both operating costs and ownership costs. Operating costs include fuel and maintenance, while ownership costs cover taxes, fees, insurance, financing and depreciation. Although averages provide a good benchmark, examining your specific expenses will give you a clearer understanding of what owning a car costs you each year.
Operating Costs
Operating costs, otherwise known as variable costs, are expenses incurred only when you drive your vehicle. Typically, these include gas, maintenance and repair costs.
Calculating the cost of gas per mile can give you valuable insight into your fuel expenses. To determine this, you can calculate two key figures: miles per gallon and cents per mile. This information can tell you how much to budget for gas when evaluating the cost of owning a car.
To calculate how many miles are possible per gallon, take the total number of miles you’ve driven and divide that by the total number of gallons for a full tank.
To calculate the dollar amount or cents per mile, divide the total cost of a full tank by the total number of miles driven.
Sample Gas Costs for a 1-Year-Old Pickup Truck
Gallons for Full Tank | Average Cost per Gallon** | Average Cost of Full Tank | Odometer (Miles) |
|---|---|---|---|
17.6 | $3.45 | $60.79 | 13,867 |
20 | $3.45 | $69.08 | 13,470 |
**Average gas price as of August 10, 2024.Source: American Automobile Association Gas Prices.
Example: Calculating for a Pickup Truck
Gas Cost | Amount |
|---|---|
Total Gallons for Full Tank | 21 Gallons |
Total Cost of Full Tank | $79.80 (at $3.80 cost per gallon) |
Total Miles Driven | 867 |
Using the table above as an example, assume you drove 397 miles, and it takes 21 gallons to fill your tank. Following the miles per gallon formula, you can drive about 18 miles per gallon.
However, if you want to calculate the dollar amount per mile or the cents per mile, divide the cost of a full tank by the total miles driven. In this example, assume that it costs $79.80 to fill your tank. If you drive 397 miles, the cost per mile is 20 cents.
Ownership Costs
The cost of car ownership involves other fees and requirements to own and operate a car. This includes auto insurance, registration and license fees, taxes and any charges associated with your auto loan. Depreciation, which is the loss of your vehicle’s value every year, is another consideration. It can impact the resale value of your car if and when you decide to sell it.
Here is a breakdown of the average ownership costs for a medium sedan, highlighting the key expenses involved:
Average Ownership Costs for a Medium Sedan
Type of Expenses | Average Cost |
|---|---|
Comprehensive Annual Insurance | $1,922 |
Licenses, Registration and Taxes | $668 |
Depreciation (15,000 Miles Annually) | $3,922 |
Finance Charge | $1,030 |
Cost per Year | $7,542 |
Cost per Day | $21 |
Source: American Automobile Association
Change in Car Ownership Costs
From 2012 to 2017, the average cost of car ownership gradually declined, reaching its lowest in 2017 at $8,468. However, there's a noticeable upward trend post-2017, culminating in a significant jump to $12,182 in 2023.
The table showcases the yearly percentage change in car ownership costs:
- 2013 saw a modest increase of approximately 2% from the previous year.
- The years 2014 to 2017 observed a consistent decline, with the most significant drop in 2014 at around -3%.
- There's a clear upward trajectory starting from 2018. In 2019, there was a nearly 5% increase, and in 2020 and 2021, there were smaller incremental increases.
- 2023 saw the most substantial increase of 13% to $12,182 from $10,729 in 2022.
This substantial growth, especially in recent years, can be attributed to various factors. As highlighted in the article, escalating gas prices play a significant role. The sharp increase in 2022 underscores the impact of these heightened gas prices on the overall cost of owning a car.
Per-Mile Cost of Ownership
From 2012 to 2017, the per-mile cost of car ownership displayed a steady decline, dropping to its lowest in 2017 at 56 cents per mile. However, starting from 2018, there's a clear upward trend, with 2022 witnessing a significant increase to 72 cents per mile.
This rise in per-mile costs, especially in recent years, can be attributed to factors such as gas prices' pivotal role in determining the overall cost of owning a car. The surge in 2022 emphasizes the influence of unprecedented gas price heights on the per-mile cost of ownership.
FAQ About Car Ownership Costs
The costs of car ownership can be confusing for first-time car buyers. Read our answers to frequently asked questions below to get a better understanding.
What is the average cost of owning a car per month?
Owning a car costs an average of $12,182 per year or $1,015 per month. However, actual costs can vary based on the vehicle type, the number of miles driven and more.
What are the recurring costs of car ownership?
The recurring costs of car ownership include repair and maintenance costs, title and registration fees, taxes, auto insurance and gas.
How do you calculate the cost of gas per mile?
To calculate the cost of gas per mile or cents per mile, simply divide the total cost of a full tank by the total miles driven. For instance, if it costs $150 to fill your tank and you’ve driven 1,000 miles, then your cents per mile is $0.15.
What is the cost of owning an electric car?
Typically, the cost of owning an electric car includes expenses for electricity, maintenance, insurance and depreciation. While electricity costs are generally lower than fuel, the overall price can vary depending on the vehicle's make and model.
Expert Insights
Owning a car for the first time can be intimidating, especially with all the fees involved. Learn how to manage it and how to make the right decision by reviewing insight from the experts.
- How much could the cost of owning a car increase in the next five years? Will first-time car buyers be able to afford to own a car?
- How can consumers with cars manage the costs of owning a vehicle?
Mike BaldicanaWeb Content Specialist at Kostex Garage Repair
Craig CampbellFounder & CEO at Auto Parts Guideline
Robert WaldenFounder of Vehicle Freak
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- Used Car Insurance: Everything You Need to Know: If you’re looking to find the most affordable insurance for a used car, review this guide from MoneyGeek. Find out how to buy used car insurance and get the lowest price.
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- How Much Does a New Car Cost?: Curious about the average cost of a car in the U.S.? This resource breaks down the latest data, helping you make informed decisions when buying a new vehicle.
- Average Cost of Car Insurance: Learn about the average cost of car insurance by month and year. This guide provides valuable benchmarks to help you find the best insurance rates.
- How Much Does Car Maintenance Cost?: Car maintenance is a significant part of the total cost of ownership. This comprehensive resource will help you discover typical maintenance expenses for your vehicle.
About Nathan Paulus
Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy.
Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.
sources
- American Automobile Association. "National Average Gas Prices." Accessed August 21, 2024.
- American Automobile Association. "Your Driving Costs 2023: How Much Does it Really Cost to Own a New Car?." Accessed August 21, 2024.
- American Automobile Association. "Your Driving Costs 2023: Total Costs." Accessed August 21, 2024.
- Bureau of Transportation Statistics. "Average Cost of Owning and Operating an Automobile." Accessed August 21, 2024.
- Bureau of Transportation Statistics. "Household Spending on Transportation: Spending per Vehicle-Mile." Accessed August 21, 2024.
