Calculating the total cost of owning your car, or the car you’re about to buy, is the best way to make sure your car budget is on point. But with so many factors contributing to the cost of car ownership, it can be difficult to know exactly how much your car will cost.
Here’s what you need to know about the cost of owning a car, including average monthly payments, shared costs, and ways to save money while still driving the car you love.
According to credit reporting agency Experian, the average monthly payment for a new car in the third quarter of 2023 was $726. Leasing a new car was as cheap as $597 per month, while owning a used car was the cheapest option, with an average monthly cost of $533. Whichever he chooses, whether he takes out a loan or leases the car, he’ll likely end up paying more than $500 a month.
But that’s far from the real cost of owning a car.
When you factor in loan interest, depreciation, fuel, insurance, maintenance, and fees, the cost of owning a car can skyrocket. According to AAA, the average cost of car ownership for a new car driven 15,000 miles per year was $12,182 per year, or $1,015 per month in 2023.
Calculating the cost of a car you don’t own yet? Find out how much you’ll pay on average here
General costs of owning a car
Regardless of the car you drive, you’ll likely need to pay for these items on a regular basis.
fuel
Fuel is one of the most volatile costs of driving a car, as prices change almost daily. According to AAA, the average driver was paying about 15.93 cents per mile for regular unleaded gas in early 2023. If you drive 15,000 miles a year, gas alone will cost you $2,390 a year. AAA base electric car charging cost The rate is 15.8 cents per kilowatt hour.
Fortunately, average fuel costs often vary by vehicle type and size. For example, sedans tend to be more fuel efficient than larger vehicles such as trucks and SUVs. Be careful how you buy gasoline You can save money at the pump.
maintenance and repair
According to AAA, the average cost for repairs, maintenance, and tires is $123 per month for a new car. Common maintenance costs include: oil change Tire changes are typically done every 5,000 miles, or three times a year in this scenario.
You’ll usually have to pay for regular maintenance due to wear and tear, but if your car is under factory warranty or an extended warranty, you won’t have to pay for certain repairs. Manufacturer warranties are typically 3 years or 36,000 miles, whichever comes first.
If your car is out of warranty, set aside some money for repairs, whether you need them every month or not. This prevents unexpected charges when occasional maintenance is required.
Registration, fees and taxes
According to AAA, the average car owner will pay $762 in license, registration, and taxes in 2023 to legally drive a car.
How these fees are calculated, how often they are paid, and how much they cost varies by state. Where you live and the type of fees you have to pay will determine how much you have to pay annually for this category.
insurance
Almost every state requires some requirements car insurance coverage. According to AAA, the average annual premium for full insurance coverage for car owners is $1,765.
but Insurance fee It’s influenced by several factors, including the coverage you choose, the type of car you drive, your age, driving history, and location. Depending on your situation and coverage options, you may pay more or less than the average premium.
depreciation expense
nevertheless depreciation expense Although it’s not a payment that requires you to pay cash, cars typically depreciate in value over time. This means money is lost over time, impacting the total cost of ownership.
It is important to note that the current car market is a special one where cars are not depreciating in value as quickly as in the past, but this may change in the near future. In a normal market, a car loses about 15% to 20% of its value in the first year. Depreciation expense for each of the next four years will be approximately 15%.
To find out how much your car has depreciated, compare current offers for the same make and model to what you originally paid.can be discovered your car’s resale value Through services such as Kelley Blue Book. Or get cash offers from local dealers or online car retailers like his Carvana or CarGurus.
There is a way, but Manage car depreciationOwning a car generally makes it harder to control this expense.
How to calculate the total cost of ownership of a car
Find out how much your car costs each month by entering your exact costs using our calculator.. The calculator is pre-populated with estimates based on 15,000 miles of driving per year.
monthly car payment Insurance premiums are self-explanatory, but here’s a closer look at estimating the other costs of owning a car.
gas. If you know how much you usually spend on fuel, enter that amount into the calculator. Otherwise, divide the number of miles you drive each month by your car’s fuel economy rating. FuelEconomy.gov. Multiply this number by the price of a gallon of gas in your area.
maintenance and repair. You can use pre-populated monthly averages based on AAA data. But if your car has recently needed a lot of work, and it’s costing you more than $1,500 a year, calculate the exact amount you’ve paid in the past 12 months and enter it here.
Registration, fees, taxes, etc. This part is easy. Simply enter the annual vehicle registration renewal amount divided by 12. Add other recurring expenses, such as parking fees.
*Note: The Total Car Cost Calculator is pre-populated with estimates based on Experian and AAA data. See our methodology below.
Maximum car cost savings
Looking at your total cost of ownership will tell you how much of your monthly income goes toward your car. If possible, it’s best to spend less than 15-20% of your take-home pay on vehicle costs.
When you realize it’s over your car budget If you want to reduce your spending, start by focusing on big-ticket items and then consider the costs you can control.
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car payment. Please take a research on it car loan refinancing See if you can qualify for a better rate, especially if your credit score has improved since you bought the car. You may be able to lower your monthly car payment.
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Insurance fee. Talk to your current insurance company about possible discounts. If you can’t get a lower premium, get quotes from other insurance companies to find better coverage.