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 a lot more than a loan payment. Utilize NerdWallet’s calculator to determine the amount you’re spending.
Written by Whitney Vandiver Writer | Car ownership, maintenance of cars Whitney Vandiver writes for NerdWallet about ways car owners can save money on ownership and maintenance. She was previously a writer in the oil and gas industry which led to her being published in national journals as well as international magazines. Whitney started writing because of enjoyment and finds stories that highlight or aid those in the LGBTQ+ community the most rewarding to craft. If she’s not working, she’s walking and reading with her Irish Wolfhound. Her home is in Houston.
as well as Shannon Bradley Lead Writer | Shannon Bradley Lead Writer , loans Shannon Bradley covers the auto loans as part of NerdWallet. While attending college to earn an education in journalism, Shannon completed an internship that led not to the newsroom instead, to a bank’s marketing department. She worked for the next 30+ years as a content writer and content manager in the field of financial services and created educational material that covered a wide spectrum of personal and business financial subjects. After being a frequent NerdWallet user for many years, Shannon welcomed the opportunity to become a writer for NerdWallet and assist more people in financial decision-making. Shannon is based in Newburgh, Indiana.
Dec 8, 2022
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The calculation of the total cost of owning your vehicle — or one you may purchase in the near future is the best method to ensure that your car budget is in order. But with soaring car prices with higher interest rates, and rising gas prices It can be difficult to figure out exactly much your car is costing you.
Here’s what you should be aware of the costs associated with owning a vehicle, including the cost of a monthly mortgage as well as the typical costs of ownership and how to go about conserving money while driving a 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 credit-reporting agency Experian. It’s an increase of $91 over the prior year. Leasing a new car was more affordable at $497 a month, and acquiring an older car was the most affordable option with an average monthly cost of $525. Regardless of your choice it is likely that you’ll be paying over $500 a month for financing an automobile purchase.
However, this is far from the true cost to own a car.
If you consider loan interest, depreciation along with insurance, fuel, maintenance and fees and other costs, the price of owning a car is an enormous leap. For new vehicles driven 15k miles per year, the average of car ownership costs were $17,728 for the year, or $894 per month, in 2022, as per AAA.
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Are you calculating the cost of the car you don’t have yet? Check out the average payment here
Average…
New automobiles
Cars that are used
Leases (new)
Monthly payment
$700.
$525.
$567.
The amount of the loan
$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 you use, you’re bound to be required to pay for these things on a regular basis.
Gas
Prices fluctuate almost every day, fuel is one of the most variable costs of driving a car. According to AAA that the average motorist paid around 18 cents a mile for unleaded gasoline in the early 2022. For a 15,000-mile annual period it’s about $2700 per year in fuel.
The positive side is that the average fuel costs often differ based on the size and type of vehicle. Sedans typically have better gas mileage than larger vehicles such as SUVs and trucks for instance, and can save money at the pump.
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Maintenance and repairs
The average price of maintenance, repairs and tires is $121 per month for a brand new car as per AAA. The most common maintenance expenses include tire rotations, which are typically done at 5,000-mile intervals which, in this instance at least three times in a year.
Although you’ll probably be required to pay for regular maintenance due to wear and tear, you’ll never have to pay for certain repairs if the car is still under the warranty of the manufacturer or an extended warranty. Manufacturer warranties are typically for 3 months or 36,000 miles depending on the number you’ve gotten first.
If your vehicle isn’t in warranty, set aside an amount of money to cover repairs, regardless of whether they’re required each month or not. This will prevent you from getting confronted with a bill that is unexpected in the event of an irregularly scheduled maintenance requirement.
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Taxes, registration fees and other taxes
According to AAA The most common car owners will be paying $675 by 2022 to get their license, registration and taxes to be able to legally drive their car.
How the charges are calculated how often they are paid , and how much they cost differ according to the state. Your location and the type of fee you are required to pay will determine the amount you must pay each year for this type of category.
Insurance
Every state has a requirement for coverage. The average annual premium for insurance with full coverage is Americans $1,588, according AAA.
However, the premium is affected by a variety of factors, such as the type of coverage you select, the type of car you own, the age of your driver, your driving record and your location. Based on your personal circumstances and your coverage options, you might pay more or less than the standard cost.
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Depreciation
While it’s not a loan that requires you to pay cash, cars usually do decrease in value over time. This means that you’re lossing money as time passes, and it affects your total cost of ownership.
It is important to remember that this is an unusual one in which depreciation has decreased however this is likely to change in the near-term. In some cases, depending on the model of car and market demand, some cars in the last year have been worth more used than they did when they were new..
But in a normal market automobiles lose between 15 to 20 percent of their value within their first year. In the following four years, depreciation is expected to be around 15 percent per year.
While depreciation isn’t something you’re paying out from your wallet It’s a part that comes with owning a car when you go to resell the car.
To determine the extent to which your vehicle has depreciated, compare current prices for the same make and model to what you originally paid for it. Find out through a service such as Kelley Blue Book. Or get a cash offer from a local vendor or a service like Carvana and Vroom..
While there are many ways to , you generally have less control over the cost once you own your own vehicle.
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How to calculate the total cost of ownership of a car
Use our calculator to find out how much your car is costing you every month . The calculator is pre-populated with estimates based on 15,000 miles of driving each year, therefore we highly recommend you fill in your exact expenses so that you can determine the total cost of your car.
and insurance premiums are self-explanatory and insurance premiums are self-explanatory, but here’s more info on how to estimate other costs associated with car ownership.
Gas. If you know how much you typically pay for fuel, you can enter that amount in the calculator. If not, divide the amount of miles you drive each month by your car’s rating for fuel efficiency, which is available on . Multiply that number by the price per gallon of gas in your local area.
Repairs and maintenance. You can go with the monthly average, which is pre-populated with AAA’s data. If your vehicle has required a lot of maintenance lately and is taking more than $1,500 annually then determine the exact amount for what you’ve paid for in the past 12 months and enter it here.
Taxes, registration, fees and miscellaneous. It’s easy to do: Just put in the annual registration fee for your motor vehicle renewal amount, divided by 12. Add any other ongoing expenses like parking fees.
Note: The total car cost calculator has been pre-populated with estimates based on information from Experian and AAA. See our methodology below.
The best car you can afford costs
By reviewing all the costs associated with owning your car you will be able to see the percentage of income that goes toward your car each month. It’s best to spend less than 15% to 20% of your take-home pay for vehicle expenses.
If you realize you’re in the red or if you want to lower your spending, look at the big ticket items first. Then start to look at expenses you can manage.
Car loan. Look into refinancing your loan to see whether you are eligible for a lower rate. This can bring down the cost of your monthly payments.
Insurance premiums. Discuss with your current insurance provider regarding potential discounts. If they won’t help you get a better rate, get quotes from other insurance companies to get a better rate on your insurance.
Gas. Pay attention to the price of gas using a tool to find the most affordable prices, and make use of .
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The authors’ bios: Whitney Vandiver is a writer for NerdWallet currently writing about car ownership and maintenance. She’s previously written about payments for small businesses and payment.
Shannon Bradley covers auto loans for NerdWallet. She has spent over 30 years working in banking as a journalist for financial education content.
Methodology
The estimates and averages used to populate this calculator are derived from a variety of sources.
Estimates for new and used car financing are based on Experian’s Q3 2022 report.
The most recent AAA study offers annual averages of costs for a variety of car-related expenses. AAA information is built on a vehicle that has been owned for five years and driving 15,000 miles per year. We’ve converted these numbers to monthly figures. The monthly total cost of car calculator utilizes AAA information for these monthly medians.
– Gas
– Insurance
License, registration, and costs
Maintenance, repair, and tires
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