What Is the Total Cost of Owning a Car?
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What is the total cost of owning a car?
Total car costs include much more than a loan payment. Make use of NerdWallet’s calculator for a quick estimate of how much you’re paying.
Written by Whitney Vandiver Writer | Car maintenance, ownership Whitney Vandiver writes for NerdWallet about how car owners can save money on ownership and maintenance. She previously wrote in the oil and gas industry, where she was featured in national publications and international magazines. Whitney became a writer out of love and finds stories that showcase or help the LGBTQ+ community the most rewarding to craft. If she’s not working, she’s walking and reading with her Irish Wolfhound. She is based in Houston.
as well as Shannon Bradley Lead Writer | Shannon Bradley Lead Writer , loans Shannon Bradley covers auto loans as part of NerdWallet. While at college to earn the degree of a journalist, Shannon completed an internship which led her not to the newsroom but to a bank marketing department. She spent the next 30-plus years as a writer and content manager in the field of financial services and created educational content that covered a wide range of personal and business financial subjects. After being a frequent NerdWallet user for many years, Shannon welcomed the opportunity to join the NerdWallet team as a writer and assist people with financial decisions. Shannon is located in Newburgh, Indiana.
Dec 8, 2022
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Table of Contents
Table of Contents
The calculation of the total cost of your car or one you could purchase soon is the most effective way to make sure your auto budget is in order. But with soaring car prices as well as higher interest rates and jumping gas prices it’s difficult to figure out exactly much your car is costing you.
Here’s what you should be aware of when it comes to owning a car, such as the monthly average, common ownership costs and how to go about saving money while still driving the car you enjoy.
Average monthly cost
The median monthly cost for a new car was $700 in the third quarter of 2022, according to the credit reporting agency Experian. This is an improvement of $91 over the year prior. The cost of leasing a brand new car was more affordable at $497 a month, and acquiring a used car was the cheapest option, having an annual average cost of $525. Regardless of your choice, you’re still likely to be paying over $500 a month if you finance a vehicle purchase.
However, that’s not the true cost to own an automobile.
When you factor in loan depreciation, interest, fuel, insurance, maintenance and fees, the cost of owning a car is huge leaps. New cars driven 15k miles per year, average car ownership costs were $10,728 a year, or $894 a month in 2022 in the report by AAA.
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Costs for an automobile you don’t own yet? Find the average cost here
Average…
New automobiles
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 a car
Regardless of the car that you drive, you’re going to have to cover these items on a regular basis.
Gas
Prices fluctuate almost every day, fuel is one of the most variable costs of driving an automobile. According to AAA estimates, the average driver paid around 18 cents a mile for regular unleaded fuel in the beginning of 2022. For a 15,000-mile annual period it’s about $2700 per year in fuel.
The good news is that average fuel costs often vary by the kind and size of the vehicle. Sedans generally get better gas mileage than bigger vehicles like SUVs and trucks, for example and they can save fuel costs at the pump.
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Repairs and maintenance
The average price of maintenance, repairs and tires is $121 per month for a brand new car as per AAA. Common maintenance costs include and tire rotations, which are typically done at 5,000-mile intervals which, in this case, three times each year.
Although you’ll probably have to pay for normal maintenance brought on by the wear and tear of your vehicle, you’ll never have to pay for certain repair costs if your car is still covered under the warranty of the manufacturer or an extended warranty. Manufacturer warranties are typically for 3 years or 36,000 miles, whichever you’ve gotten first.
If your vehicle isn’t covered under warranty, set aside some money for repairs, regardless of whether they’re required every months or not. This will prevent you from getting hit with an unexpected bill for maintenance that is not regular.
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Taxes, registration fees and other taxes
According to AAA, the typical car driver will pay $675 by 2022 to get their license and registration, as well as taxes, to be able to legally drive their car.
How these charges are calculated the often they are paid , and how much they cost differ according to the state. The place you reside and the type of fees you have to pay will determine the amount you have to pay annually for this type of category.
Insurance
Almost every state requires some coverage. The annual average premium for full-coverage insurance is Americans $1,588, as per AAA.
However, the premium is affected by many factors, including the type of coverage you select and the kind of vehicle you use, your age and driving record, as well as your location. Based on your situation and your coverage options you could pay more or less than the typical price.
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Depreciation
Even though it’s not a purchase that has you shelling out cash, vehicles usually decline in value over time. That means that you’re losing money over time and that can affect your total cost of ownership.
It’s crucial to recognize that the is a unique one in which depreciation has decreased but this is expected to change in the near future. In some cases, depending on the model of car and market demand, some cars in the last year are worth more than they did when they were new..
In a normal market, cars lose around 15 to 20 percent of their value within the first year. In the following four years, the depreciation rate will be around 15 percent per year.
Depreciation, while it’s not money you pay out of your pocket, it is a cost of owning a vehicle when you go to resell the car.
To determine the amount your car has lost value, check current prices for the same model and brand against the price you originally paid for it. You can find via a site like Kelley Blue Book. Or get a cash offer from a local dealer or an such as Carvana and Vroom..
While there are many ways to reduce the cost, you are not in control of the cost once you own your vehicle.
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How can you estimate the total cost of ownership of a car
Our calculator can be used to see the amount your car is costing you every month . The calculator comes pre-populated with estimates from 15,000 miles of driving each year, therefore we strongly urge you to enter your exact expenses to see your total car costs.
Insurance premiums and car insurance are easy to understand and insurance premiums are self-explanatory, but here’s more info on how to estimate other costs associated with the ownership of a car.
Gas. If you know how much you typically spend on fuel, enter the amount into the calculator. If not, divide the amount of miles you drive each month by the fuel economy rating, available on . Multiply that number by price per gallon of gasoline in your region.
Maintenance and repairs. It’s possible to use the monthly average which is pre-populated with AAA’s data. If your vehicle has needed a lot of work lately , and it’s taking more than $1,500 annually you can determine the exact amount for what you’ve paid in the last 12 months. Then input it in this.
Taxes, registration, fees and miscellaneous. The process is simple Simply enter the annual registration fee for your motor vehicle renewal cost, and divide by 12. Add any other recurring expenses like parking fees.
Note: The total car cost calculator is pre-populated with estimates that are based on information from Experian in addition to AAA. Learn more about our methodology.
The best car you can afford cost
If you review the total cost of ownership, you will be able to see the percentage of income that goes toward your vehicle each month. It’s recommended to budget less than 15%-20 percent of your monthly take-home earnings on vehicle costs.
If you notice you’re spending too much or want to lower your expenses, consider the most expensive items first, and start to look at expenses you can manage.
Payment for your car. Consider getting a refinance on your loan to determine if you can qualify for a better rate. This can bring down your monthly installment.
Insurance premiums. Discuss with your current insurance provider about discounts that might be available. If they’re not able to assist you in obtaining the best rate, seek quotes from other insurers to find a better price on your coverage.
Gas. Be aware of the gas prices by using a search engine to find the cheapest prices, and use .
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The authors’ bios: Whitney Vandiver is a writer for NerdWallet currently writing about maintenance and car ownership. She has previously written about payments for small businesses and payment.
Shannon Bradley covers auto loans for NerdWallet. She spent over 30 years working in banking as a journalist for financial educational content.
Methodology
The averages and estimates that are used to populate the calculator come from various sources.
Estimates for new and used car financing are based on Experian’s Q3 2022 report.
The most recent AAA study provides annual average costs for a range of car-related expenses. AAA figures are based on a new vehicle that was owned for five years, and driven 15,000 miles a year. We’ve converted these numbers into monthly sums. The total monthly cost of a car calculator utilizes AAA statistics for monthly monthly mean:
– Gas
– Insurance
License, registration and other fees
– Maintenance, repair and tires
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