What Is the Total Cost of Owning a Car?

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What is the total cost of owning a car?
Total costs for your car include a lot more than the loan payment. Utilize NerdWallet's calculator to determine how much you're paying.
by Whitney Vandiver Writer | Car ownership, maintenance of cars Whitney Vandiver writes for NerdWallet on ways that car owners can save money on ownership and maintenance. She was previously a writer in the oil and gas industry, where she was recognized in national newspapers as well as international magazines. Whitney became a writer out of a sense of fun and believes that stories that celebrate or aid those in the LGBTQ+ community the most satisfying to write. When she's not writing, she enjoys walking and reading with her Irish wolfhound. She is based in Houston.




And Shannon Bradley Lead Writer | Shannon Bradley Lead Writer , loans Shannon Bradley covers Shannon Bradley covers auto loans for NerdWallet. While in college, pursuing an education in journalism, Shannon completed an internship that led not to the newsroom but rather to a bank's marketing department. The next 30 plus years as a journalist and content manager in the field of financial services writing educational content that covered a broad spectrum of personal and business financial topics. After having been a reader of NerdWallet for several years, Shannon welcomed the opportunity to become a writer for NerdWallet and help more people with financial decision-making. Shannon is based in Newburgh, Indiana.





Dec 8, 2022







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Estimating the total cost to owning your vehicle -- or one that you could purchase soon is the best method to make sure your auto budget is in order. However, with the rising cost of cars, higher interest rates and rising gas prices, it can be difficult to know exactly how much your car is costing you.
This is what you must know about the cost of owning a vehicle, including the cost of a monthly mortgage along with the common costs for ownership and ways of saving money while still driving a car you enjoy.
Cost per month for the average

The average monthly payment on a new car averaged $700 during the quarter-third quarter 2022, according to credit-reporting agency Experian. That's the increase in $91 over the year prior. A new car that was leased was cheaper at $497 a month, and acquiring an older car was the cheapest option, with an average monthly cost of $525. No matter which option you pick, you're still likely to pay more than $500 a month if you finance a vehicle purchase.
However, that's not the true cost to own the car.
When you take into account loan interest, depreciation along with insurance, fuel, maintenance and charges cost, the expense of owning a vehicle makes huge leaps. For new vehicles driven at 15,000 miles per year, the average of car ownership costs were $17,728 for the year, or $894 per month in 2022 in the report by AAA.
>> MORE:
Calculating costs for an automobile you don't own yet? Find the average cost here

Average...



New cars



Cars that are used



Leases (new)



Monthly payment


$700.


$525.


$567.


The loan amount


$41,665.


$28,506.


N/A.


A loan term


69.73 months.


68.08 months.


35.86 months.


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















The typical costs associated with owning the car

Regardless of the car you drive, you're likely to be required to pay for these items frequently.
Gas
With prices fluctuating almost daily fuel is among the most variable costs of driving in a car. According to AAA estimates, the average driver spent around 18 cents a mile for regular unleaded fuel in early 2022. For a 15,000-mile annual period that's around $2700 per year in fuel.
The good news is that prices for fuel depend on the type and size of the vehicle. Sedans typically have better gas mileage than larger vehicles, like trucks and SUVs, for example and they can save fuel costs at the pump.
>> MORE:
Maintenance and repairs
The average price of maintenance, repairs as well as tires can be $121 per month for a new car according to AAA. Common maintenance costs include and tire rotations, which are typically scheduled at intervals of 5,000 miles, and, as in the above instance, three times each year.
While you'll need to pay for your normal maintenance brought on by wear and tear, you'll never have to pay for certain repairs if your vehicle is still covered under the warranty of the manufacturer or an extended warranty. The warranty offered by manufacturers typically lasts for 3 months or 36,000 miles whichever you've gotten first.
If your vehicle isn't covered under warranty, save some money for repairs, whether they're needed every month or not. This keeps you from being hit with an unexpected bill in the event of an irregularly scheduled maintenance requirement.
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Registration, fees and taxes
According to AAA according to AAA, the average car owner will have to pay $675 in 2022 for licensing, registration and tax to be able to legally drive their car.
How the costs are decided, how often they have to be paid and how much they cost vary by state. The place you reside and the type of fees you are required to pay will determine how much you must pay each year for this type of category.
Insurance
Nearly every state requires coverage. The average annual cost for full-coverage insurance is Americans $1,588, according to AAA.
However, it is influenced by several factors, including the coverage you choose and the kind of vehicle you use, your age, your driving record and the location you live in. Based on your situation and the coverage you choose you could have to pay more or less average premium.
>> MORE:
Depreciation
While it's not a loan that requires you to pay cash, vehicles usually decrease in value over time. This means that you're losing money over time and that can affect your total cost of ownership.
It is important to remember that this is an unusual one where depreciation has shrunk however this is likely to be changed in the near future. In some cases, depending on the car model and market demand, some vehicles in the last 12 months have been valued higher than they were when they were new..
However, in a market that is normal, cars lose around 15% to 20 percent of their value within the first year. Over the next four years, the depreciation rate will be approximately 15 percent per year.
So while depreciation isn't money that you're spending out from your wallet It's a part that comes with owning a car when you go to resell the car.
To figure out how much your car has depreciated, compare current offers for the same model and brand with the price you paid originally for it. You can find via a site like Kelley Blue Book. You can also get a cash deal from a local vendor or an such as Carvana as well as Vroom..
Although there are methods to reduce the cost, you are not in control of the expense after you own your own vehicle.
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How do you calculate your total cost of ownership of a car

Our calculator can be used to find out how much your car is costing you each month . The calculator comes pre-populated with estimates from 15,000 miles of driving per year, so we recommend that you fill in your exact expenses so that you can see your total car costs.
and insurance premiums are self-explanatory However, here's more details about estimating other expenses of automobile ownership.
Gas. If you are aware of how much you typically spend on fuel, then enter that amount in the calculator. Otherwise multiply the number of miles you travel each month by your vehicle's rating for fuel efficiency, which is available on . Multiply that number by the cost of a gallon of fuel in your area.
Maintenance and repairs. It's possible to use the monthly average, which is pre-populated based on AAA's data. If your vehicle has been in need of a lot of repairs lately , and it's costing you more than $1500 a year in work you can calculate the exact figure for the amount you've spent in the past 12 months and enter it here.
Taxes, registration, fees and miscellaneous. It's easy to do: Just put in your annual motor vehicle registration renewal cost, and divide by 12. Include any other expenses that are recurring like parking fees.
*Note: The total car cost calculator is pre-populated with estimates based on the data of Experian in addition to AAA. Learn more about our methodology.
Saving on your biggest car costs

If you review all the costs associated with owning your car you can see the portion of your income that is used to pay for the car every month. It's recommended to budget less than 15 to 20 percent of your monthly take-home earnings on vehicle costs.
If you realize you're in the red or you're looking to lower your spending, look at the big ticket items first. Then start to look at the costs that you are able to control.
Car loan. Try getting a refinance on your loan to determine if you can qualify to receive a better interest rate. This can bring down your monthly payment.
Insurance premiums. Talk with your current insurance provider about potential discounts. If they're not able to aid you in getting the best rate, seek quotes from different insurers to locate a better deal on your coverage.
Gas. Pay attention to the price of gas by using a search engine to find the lowest prices and make use of .

From top to bottom



The authors' bios: Whitney Vandiver is a writer at NerdWallet which is currently focused on car ownership and maintenance. She has previously written about payments and small business.


Shannon Bradley covers auto loans for NerdWallet. She spent over 30 years in banking as a writer for financial education content.




Methodology
The estimates and averages used to populate this calculator are derived from a variety of sources.
Estimates of new and used car loans are derived from Experian's Q3 report for 2022.
The most recent AAA study provides annual average costs for a variety of car-related expenses. AAA figures are built on a vehicle that has been that was owned for five years, and driven 15,000 miles a year. These figures have been converted to monthly figures. The monthly total cost of car calculator utilizes AAA information for these monthly medians.
- Gas
- Insurance
- License, registration and fees
Repair, maintenance and tires







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