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 the loan payment. Make use of NerdWallet’s calculator for a quick estimate of the amount you’re paying.
Written by Whitney Vandiver Writer | Car ownership, car maintenance Whitney Vandiver writes for NerdWallet about how car owners can save money on ownership as well as maintenance. She previously wrote in the oil and gas industry where she was published in national journals as well as international magazines. Whitney became a writer out of enjoyment and finds stories that showcase or aid people in the LGBTQ+ community the most satisfying to write. If she’s not working, she enjoys walking, reading, and walking her Irish wolfhound. She’s based in Houston.
And Shannon Bradley Lead Writer | and Shannon Bradley Lead Writer, loans Shannon Bradley covers auto loans and auto loans for NerdWallet. While attending college to earn an education in journalism, Shannon completed an internship that did not lead to the newsroom, but to a bank marketing department. She spent the next 30-plus years as a content writer and content manager in the financial services industry, creating educational content that covered a wide range of personal and business financial issues. After being a frequent NerdWallet user for many years, Shannon welcomed the opportunity to become a NerdWallet writer and help more people with financial decisions. Shannon lives at Newburgh, Indiana.
Dec 8, 2022
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Table of Contents
Table of Contents
Calculating the total cost of your vehicle — or one you might buy soon — is the best way 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.
Here’s what you should be aware of when it comes to owning a car, such as the average monthly payment as well as the typical costs of ownership and ways of saving money while still driving the car that you love.
Cost per month for the average
The average monthly payment on the purchase of a brand new car is $700 for the 3rd quarter in 2022, according to credit-reporting agency Experian. This is an increase of $91 compared to the year prior. A new car that was leased was more affordable at $497 a month, and owning a used car was the least expensive option having an annual average payment of $525. Whatever you choose however, you’ll likely be paying more than $500 per month if you finance an automobile purchase.
However, that’s not the real cost to owning the car.
When you take into account loan depreciation, interest, fuel, insurance, maintenance and charges cost, the expense of owning a car makes a big leap. For brand new cars that travel at 15,000 miles per year, the average of cost of ownership was $10,728 per year or $894 a month, in 2022, as per AAA.
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Are you calculating the cost of an automobile you don’t own 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.
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
Whatever vehicle that you drive, you’re going to have to pay for these things regularly.
Gas
With prices fluctuating almost daily fuel is among the most fluctuating costs of driving an automobile. According to AAA, the average driver spent around 18 cents a mile for regular unleaded fuel in early 2022. In a year of 15,000 miles, that’s $2,700 annually just in fuel.
The positive side is that the cost of fuel can depend on the size and type of vehicle. Sedans tend to be more efficient than bigger vehicles like trucks and SUVs such as, for example, and can save money on the gas pump.
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Repairs and maintenance
The average price of repairs, maintenance and tires is $121 a month for a brand new car, according to AAA. Common maintenance costs include and tire rotations, which are typically done at 5,000-mile intervals and, as in the above instance, three times each year.
Although you’ll probably need to pay for your regular maintenance caused by damage and wear, you’ll not have to pay for certain repair costs if your car is still covered under the factory warranty or an extended warranty. Manufacturer warranties are typically for 3 years or 36,000 miles, whichever you’ve gotten first.
If your car isn’t under warranty, save funds for repairs, regardless of whether they’re required every month or not. This keeps you from being confronted with a bill that is unexpected in the event of an irregularly scheduled maintenance requirement.
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Registration, fees and taxes
According to AAA according to AAA, the most common car owners will be paying $675 in 2022 to obtain a license, registration and taxes for their vehicle in order to legally operate it.
How these charges are calculated how often they are paid , and the amount they cost can vary by state. Your location and the type of fees you are required to pay will determine how much you will have to pay each year for this type of category.
Insurance
Every state has a requirement for insurance. The average annual premium for insurance with full coverage is Americans $1,588, according to AAA.
However, it is influenced by several factors, including the coverage you choose, the type of car you drive, your age, your driving record and your location. Based on your personal circumstances and your coverage options you may pay more or less than the standard price.
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Depreciation
Even though it’s not a purchase that has you shelling out cash, vehicles usually decrease in value in time. That 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 a singular one where depreciation has shrunk but this is expected to be changed in the near future. In some cases, depending on the car model and market demand, some vehicles over the past year have been valued higher than they were when they were new..
In a normal market, cars lose around 15 to 20 percent of their value within their first year. Over each of the next four years, depreciation is expected to be about 15 percent per year.
Depreciation, while it’s not money you pay out of your pocket, it is a cost of owning a car when you go to resell the car.
To get an idea of the extent to which your vehicle has appreciated, you can compare current offers for the same model and brand against the price you paid originally for it. It is possible to find this information the information through a website like Kelley Blue Book. You can also get a cash deal from a local dealer or an such as Carvana as well as Vroom..
While there are ways to do this, you’ll are not in control of the cost once you own your car.
From top to bottom
How do you calculate the total cost of ownership of a car
Our calculator can be used to find out the amount your car is costing you every month . The calculator comes pre-populated with estimates that are based on 15,000 miles driving each year, therefore we recommend that you enter your exact expenses to see your total car costs.
and insurance premiums are self-explanatory and insurance premiums are self-explanatory, but here’s more info about estimating other expenses of car ownership.
Gas. If you know the amount you usually spend on fuel, then enter the figure into the calculator. If not you can divide the miles you drive in a month by your vehicle’s fuel economy rating, available on . Divide that number by the price of a gallon of fuel in your local area.
Repairs and maintenance. You can go with the monthly average which is pre-populated with AAA’s data. But if your car has needed a lot of work recently and is taking more than $1,500 per year you can calculate the exact figure for the amount you’ve spent in the past 12 months . You can input it in this.
Taxes, registration, fees and other miscellaneous. The process is simple Simply enter your annual registration renewal fee, then divide it by 12. Include any other expenses that are recurring such as parking costs.
*Note: The total car cost calculator is pre-populated with estimates based on data from Experian and AAA. See our methodology below.
Saving on your biggest car costs
When you look at your total costs of owning a car you will be able to see the percentage of income that goes toward your car each month. It’s recommended to budget less than 15 to 20% of your take-home pay on vehicle costs.
If you realize you’re in the red or want to lower your expenditure, take a look at your big-ticket items first and start to look at the costs that you are able to control.
Car loan. Try getting a refinance on your loan to determine whether you qualify for a better rate. This can lower your monthly payment.
Insurance premiums. Discuss with your current insurance provider regarding potential discounts. If they won’t help you get an improved rate, request quotes from other insurers to find a better price on your insurance.
Gas. Be aware of the gas prices by using a to locate the cheapest prices, and make use of .
Back to top
Authors’ Bio: Whitney Vandiver is a writer at NerdWallet currently focusing on maintenance and ownership of cars. She’s written previously about payments and small business.
Shannon Bradley covers auto loans for NerdWallet. She worked for more than 30 years working in banking as a writer of financial education content.
Methodology
The averages and estimates that are 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.
AAA’s most recent research offers annual averages of costs for a variety of car-related expenses. AAA information is basing its calculations on a brand new car owned for five years and driving 15,000 miles a year. We’ve converted these figures into monthly sums. The total monthly car cost calculator utilizes AAA information for these monthly medians.
– Gas
– Insurance
License, registration, and costs
Maintenance, repair, and tires
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