What Is the Total Cost of owning a car?

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What is the total cost of Owning a Car?
The total cost of your car is many more things than a loan payment. Use NerdWallet's calculator to see the amount you're spending.
by Whitney Vandiver Writer | Car maintenance, ownership Whitney Vandiver writes for NerdWallet about ways car owners can save money on ownership and maintenance. She was previously a writer in the petroleum and gas industries, where she was published in national journals as well as international magazines. Whitney started writing because of love and believes that stories that celebrate or help those in the LGBTQ+ community the most satisfying to write. When she's not writing, she's walking and reading with her Irish wolfhound. She's based in Houston.




And Shannon Bradley Lead Writer | , loans Shannon Bradley covers the auto loans and auto loans for NerdWallet. While in college, pursuing a journalism degree, Shannon completed an internship that did not lead to the newsroom, instead, to a bank's marketing department. She spent the next 30-plus years as a content writer and content manager in the financial services industry writing educational material that covered a wide variety of business and personal financial topics. After being a NerdWallet reader for many years, Shannon welcomed the opportunity to join the NerdWallet team as a writer and assist more people in financial decision-making. Shannon is based within Newburgh, Indiana.





Dec 8, 2022







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Estimating the total cost of owning your car or one you might buy soon -- is the best way to ensure that your car budget is on track. However, with the rising cost of cars, higher interest rates and jumping gas prices, it can be difficult to know exactly how much your car will cost you.
Here's what you need to know about the cost of owning a car, including the cost of a monthly mortgage along with the common costs for ownership and how to go about saving money while still driving the car you are passionate about.
Cost per month for the average

The average monthly payment on the purchase of a brand new car was $700 in the third quarter of 2022 according to the credit reporting agency Experian. That's an increase of $91 compared to the previous year. Leasing a new car was more affordable at $497 a month, and acquiring an used vehicle was the least expensive option with an average monthly cost of $525. No matter which option you pick it is likely that you'll be paying over $500 a month when you finance a vehicle purchase.
However, this is far from the real cost to owning an automobile.
If you consider loan interest, depreciation, fuel, insurance, maintenance and other fees and other costs, the price of owning a car makes an enormous leap. For brand new cars that travel 15,000 miles a year, the median car ownership costs were $10,728 per year, or $894 a month in 2022, according to AAA.
>> MORE:
Costs for the car you don't have yet? See average payments here

Average...



New cars



Cars that are used



Leases (new)



Monthly payment


$700.


$525.


$567.


The loan amount


$41,665.


$28,506.


N/A.


Loan term


69.73 months.


68.08 months.


35.86 months.


Source: State of the Automotive Finance Market, Experian Information Solutions Inc.















Common costs of owning an automobile

Regardless of the car that you drive, you're going to have to pay for these items on a regular basis.
Gas
With prices changing almost daily fuel is one of the most volatile costs associated with driving an automobile. According to AAA estimates, the average driver spent around 18 cents a mile for regular unleaded gas in the early 2022. In a year of 15,000 miles that's around $2700 per year in fuel.
The good news is that cost of fuel can depend on the kind and size of the vehicle. Sedans typically get better gas mileage than larger vehicles, like trucks and SUVs such as, for example and could save you cash at the pump.
>> MORE:
Maintenance and repairs
However, the average cost of repairs, maintenance as well as tires can be $121 a month for a new car according to AAA. The most common maintenance expenses include tire rotations. These are generally done at 5,000-mile intervals and, as in the above scenario 3 times per year.
While you'll have to pay for regular maintenance caused by damage and wear, you'll never be required to cover certain repairs if the car is still covered under the warranty of the manufacturer or an extended warranty. Manufacturer warranties are typically for three months or 36,000 miles depending on the number you hit first.
If your vehicle isn't in warranty, you should save some money for repairs, whether they're needed each monthly or not. This prevents you from being faced with an unexpected bill in the event of an irregularly scheduled maintenance requirement.
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Registration, fees , and taxes
According to AAA, the average car owner will pay $675 in 2022 for licensing, registration and taxes for their vehicle in order to legally operate it.
The way these charges are calculated the often they are paid and the amount they cost can vary by state. The place you reside and the type of fee you are required to pay will determine how much you must pay each year in this category.
Insurance
Nearly every state requires insurance. The average annual premium for insurance with full coverage is Americans $1,588, according to AAA.
However, the premium is affected by many factors, including the coverage you choose, the type of car you own, the age of your driver, your driving record and your location. Based on your situation and coverage options you may have to pay more or less typical cost.
>> MORE:
Depreciation
While it's not a loan which requires cash, vehicles usually decrease in value as time passes. That means that you're lossing money as time passes, and it affects your total cost of owning a car.
It's important to note that this is a singular one where the depreciation rate has decreased, though this is likely to be changed in the near future. In certain instances, based on the type of car and the market demand, certain vehicles over the past year have been valued higher than they were when they were new..
However, in a market that is normal car, it is estimated that cars will lose 15 to 20% of their value in the first year. In the following four years, depreciation is expected to be approximately 15% per year.
So while depreciation isn't money that you're spending out from your wallet but it's an expense of owning a car when you go to resell the vehicle.
To get an idea of the extent to which your vehicle has appreciated, you can compare current prices for the same make and model to what you paid for it originally. You can find the information through a website like Kelley Blue Book. You can also get a cash deal from a local dealer or a service like Carvana as well as Vroom..
While there are ways to reduce the cost, you have less control over the cost once you own your own vehicle.
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How can you estimate the total cost of car ownership

Use our calculator to determine how much your car costing you every month . The calculator is pre-populated with estimates that are based on 15,000 miles driving per year, so we recommend that you enter your exact expenses to know the total costs of your car.
and insurance premiums are self-explanatory, but here's more information about estimating other expenses of the ownership of a car.
Gas. If you know how much you typically pay for fuel, you can enter the figure into the calculator. Alternately, divide the number of miles you drive in a month by your vehicle's fuel economy rating, available on . Multiply that number by the price of a gallon of gas in your local area.
Repairs and maintenance. You can go with the monthly average that's pre-populated with AAA's data. But if your car has been in need of a lot of repairs lately , and it's costing you more than $1,500 per year then calculate the exact figure for what you've paid in the past 12 months and put it here.
Registration, fees, taxes and other miscellaneous. The process is simple: Just put in the annual registration fee for your motor vehicle renewal amount, divided by 12. Include any other expenses that are recurring like parking fees.
Note: The total car cost calculator is pre-populated with estimates that are based on the data of Experian as well as AAA. Learn more about our methodology.
Save money on the biggest car costs

By reviewing all the costs associated with owning your car you can determine the amount of your earnings that go towards your car each month. It is recommended to spend no more than 15 to 20 percent of your monthly take-home earnings on vehicle costs.
If you notice you're spending too much or you're looking to reduce spending, look at the big ticket items first. Then work your way through the costs that you are able to control.
Car payment. Look into the possibility of refinancing your loan to see if you can qualify to receive a better interest rate. This can lower your monthly installment.
Insurance premiums. Contact your current insurance company about potential discounts. If they aren't able to help you get a better rate, get quotes from different insurers to get a better rate for your coverage.
Gas. Pay attention to the price of gas by using a search engine to find the cheapest prices, and then use .

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About the authors: Whitney Vandiver is a writer for NerdWallet currently focusing on car ownership and maintenance. She has previously written about payments and small business.


Shannon Bradley covers auto loans for NerdWallet. She spent nearly 30 years working in banking as a writer of financial educational content.




Methodology
The estimates and averages used to populate this calculator are derived from a variety of sources.
Estimates for new and used car payments are from Experian's Q3 2022 report.
AAA's most recent study provides annual average costs for a range of car-related expenses. AAA information is built on a vehicle that has been which was in use for five years, and driven 15k miles per year. These figures have been converted into monthly sums. The monthly total cost of car calculator utilizes AAA data for the following monthly averages:
- Gas
- - Insurance
License, registration and other fees
- Maintenance, repair and tires







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