How much does it really cost to own a car?

Your monthly expenses don't stop at your car loan payment.

Last updated:

We value our editorial independence, basing our comparison results, content and reviews on objective analysis without bias. But we may receive compensation when you click links on our site. Learn more about how we make money from our partners.

Car ownership can bring a lot of freedom and flexibility to your life — but it also comes with a financial commitment that lasts long after your car loan is paid off. If you’re looking to create a budget for your next car, take these factors into account when determining how much it will cost you in the long run.

What is the actual cost of owning a car?

The average cost to own a car is $8,849 a year — or around $738 a month — according to AAA’s 2018 Your Driving Costs report. It found that small sedans are the cheapest to own, clocking in at just under $7,000 annually. Pickup trucks are the most expensive, with an average ownership cost of just over $10,000 a year.

This represents vehicles driven about 15,000 miles a year and includes the cost of fuel, maintenance, repairs, insurance, fees, depreciation and loan interest — but not the loan principal. The average monthly loan payment was $545 for a new car and $387 for a used car, according to Experian’s 2018 State of the Automotive Finance Market report.

However, these numbers are just averages. Your actual cost of car ownership will vary depending on how often you drive, where you live, what you drive and other factors. Use these numbers as a guideline when estimating your own annual budget.

How can I calculate the cost of car ownership?

The easiest way to calculate the cost of owning a new or new-to-you car is to look at online resources like Edmunds and Kelley Blue Book. Both have a five-year cost-to-own estimate for different makes and models.

They take six factors into consideration — alongside depreciation — to give you an idea of how much it will cost to own a specific car.

How does depreciation factor into my car costs?

Depreciation is a car’s loss of value over time. It isn’t an out-of-pocket expense like the other factors on this list, but it impacts the total cost of your car. In general, new cars lose over 20% of their value within the first year. And by the end of five years, a new car may lose up to 60% of its value. Used cars depreciate at a less drastic rate, usually around 17.5% per year.

Opting for a car that has a slower rate of depreciation can help you avoid becoming upside down on your car loan — meaning you owe more than your car is worth. And taking steps to reduce your car’s depreciation can help you get more money when you decide to sell it or trade it in down the road. You can learn more with our guide to depreciation.

How can I lower the cost of owning a car?

From opting for a used car to keeping up with maintenance, here are four ways to lower the cost of car ownership:

  • Buy used. If you’re stuck between a new or a used car, opt for lightly used. Someone else has already taken the brunt of the depreciation, so you can pay far less for a car that’s nearly as good as new.
  • Refinance your car loan. An expensive car payment is a quick way to suck your budget dry. If your credit has recently improved, you may find that refinancing your car loan is an easy way to lower your monthly repayment.
  • Shop for a new insurance quote. Like your monthly payment, a high insurance premium can add to the cost of car ownership. Take the time to shop for quotes and see what another provider may be able to offer.
  • Maintain your car regularly. Car manufacturers recommend regular servicing and maintenance — it’s often required to keep your warranty in effect. This can help reduce the risk of a bigger repair later on.

Compare car loans

Updated December 5th, 2019
Name Product Filter Values Minimum credit score Loan term Requirements
300
Varies by lender
Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
600
Varies by lender
Fair to excellent credit, an income source, US citizen or permanent resident, 18+ years old
Find an offer and get rates from competing lenders without affecting your credit score.
300
Varies by lender
Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.
Get connected with an auto lender near you, even if you have bad credit.
500
3 months to 12 years
Credit score of 500+, legal US resident and ages 18+.
Quickly compare multiple online lenders with competitive rates depending on your credit.
Good to excellent credit
2 to 7 years
Good or excellent credit, enough income or assets to afford a new loan, US citizen or permanent resident, 18+ years old
Quick car loans from $5,000 to $100,000 with competitive rates for borrowers with strong credit.
Good to excellent credit
Varies by lender
18+ years old, good to excellent credit, US citizen
Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out.

Compare up to 4 providers

Bottom line

A car can cost tens of thousands of dollars over the course of five years. Using sites like Kelley Blue Book and Edmunds to create a yearly budget can help you pick a car you’re able to afford in both the short and long term.

When you’re ready to hit the dealership, compare car loans ahead of time to find the best rate available to you — and lower the cost of your car payment.

Frequently asked questions

Was this content helpful to you? No  Yes

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site