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 many more things than a loan payment. Use NerdWallet's calculator to see how much you're spending.
by Whitney Vandiver Writer | Car maintenance, ownership 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 where she was featured in national publications and international magazines. Whitney began writing out of enjoyment and believes that stories that celebrate or help people in the LGBTQ+ community the most satisfying to write. If she's not working, she enjoys reading and walking with her Irish Wolfhound. She is based in Houston.




and Shannon Bradley Lead Writer | , loans Shannon Bradley covers Shannon Bradley covers auto loans for NerdWallet. While attending college to earn the degree of a journalist, Shannon completed an internship that led not to the newsroom, instead, to a bank's marketing department. She spent the next 30-plus years as a content writer and content manager within the financial services industry and created educational content that covered a broad spectrum of personal and business financial issues. After being a NerdWallet reader for a long time, Shannon welcomed the opportunity to become a writer for NerdWallet and help more people with financial decisions. Shannon lives within Newburgh, Indiana.





Dec 8, 2022







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Calculating the total cost to owning your car or one you may purchase in the near future is the best way to ensure that your car budget is in line. With rising car prices, higher interest rates and a soaring price for gas, it can be difficult to figure out exactly the cost of your car is to you.
This is what you must be aware of the costs associated with owning a vehicle, including the cost of a monthly mortgage along with the common costs for ownership and ways of conserving money while driving the car you love.
Cost of a month on average

The monthly average payment for the purchase of a brand new car averaged $700 during the quarter-third quarter 2022 according to the credit reporting agency Experian. That's an improvement of $91 from the previous year. Leasing a new car was more affordable at $497 a month, and owning an older car was the least expensive option which equates to an average monthly cost of $525. Regardless of your choice however, you'll likely be paying more than $500 per month when you finance a vehicle purchase.
However, that's not the actual cost of owning a car.
When you factor in loan interest, depreciation and insurance, as well as fuel maintenance and fees cost, the expense of owning a car makes an enormous leap. For brand new cars that travel 15,000 miles a year, average car ownership costs were $10,728 a year, or $894 per month in 2022, in the report by AAA.
>> MORE:
Are you calculating the cost of a car you don't have 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.















Common expenses of owning a car

Whatever vehicle that you drive, you're going to have to cover these things on a regular basis.
Gas
Prices fluctuate almost every day, fuel is one of the most volatile costs associated with driving a car. According to AAA, the average driver was paying around 18 cents per mile for unleaded gasoline in the beginning of 2022. For a 15,000-mile annual period that's around $2700 per year in fuel.
The positive side is that the prices for fuel vary by the size and type of the vehicle. Sedans tend to get better gas mileage than bigger vehicles like SUVs and trucks such as, for example and they can save money at the pump.
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Maintenance and repairs
However, the average cost of maintenance, repairs or tires runs $121 per month for a car that is brand new, according to AAA. Common maintenance costs include and tire rotations, which are typically scheduled at intervals of 5,000 miles, which, in this instance 3 times per year.
Although you'll probably be required to pay for regular maintenance due to wear and tear, you won't have to pay for certain repairs if the car is still covered under the factory warranty or 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 funds for repairs, regardless of whether they're required every months or not. This prevents you from being confronted with a bill that is unexpected for maintenance that is not regular.
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Registration, fees , and taxes
According to AAA according to AAA, the typical car driver will be paying $675 in 2022 for licensing, registration and tax for their vehicle in order to legally operate it.
How the fees are calculated, how often they are paid and how much they cost differ according to the state. Where you live and the type of fees you must pay will determine how much you must pay each year for this category.
Insurance
Almost every state requires some coverage. The average annual premium for full-coverage insurance runs Americans $1,588, according to AAA.
However, the premium is affected by several factors, including the selected coverage as well as the type of vehicle you drive, your age and driving record, as well as your location. Based on your personal circumstances and coverage options you could have to pay more or less standard price.
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Depreciation
Even though it's not a purchase which requires cash, cars usually do decline in value over time. That means that you're lossing money as time passes and it affects your total cost of owning a car.
It is important to remember that the is a unique one where depreciation has shrunk however this is likely to be changed in the near future. In some instances, based on the type of car and market demand, some cars in the last year are worth more than they did when they were brand new..
But in a normal market, cars lose around 15% to 20 percent of their value during their first year. In the following four years, the depreciation rate will be approximately 15 percent per year.
While depreciation isn't something you pay out of your pocket, it is a cost of owning a car when you are planning to sell the car.
To determine the amount your car has lost value, check current offers for the same model and make against the price you paid originally for it. It is possible to find this information through a service such as Kelley Blue Book. Or get a cash offer from a local vendor or an such as Carvana and Vroom..
While there are many ways to do this, you'll have less control over this expense once you own your own vehicle.
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How do you calculate the total cost of car ownership

Use our calculator to see the amount your car is costing you every month . The calculator is pre-populated with estimates based on 15,000 miles of driving per year, so we highly recommend you fill in your exact expenses so that you can know the total costs of your car.
Insurance premiums and car insurance are easy to understand, but here's more information about estimating other expenses of the ownership of a car.
Gas. If you are aware of how much you typically spend on fuel, then enter the amount into the calculator. Otherwise multiply the amount of miles you travel each month by your car's efficiency rating, which you can find on . Multiply that number by price per gallon of gasoline in your region.
Repairs and maintenance. You can go with the monthly average that's pre-populated using AAA's information. But if your car has needed a lot of work lately , and it's taking more than $1,500 a year in work you can calculate the exact figure for the amount you've spent in the last 12 months. Then input it in this.
Taxes, registration fees, and other miscellaneous. This part is easy Put in your annual registration renewal fee, then divide it by 12. Include any other expenses that are recurring such as parking charges.
*Note: The car cost calculator has been pre-populated by estimates based on information from Experian and AAA. See our methodology below.
The best car you can afford cost

When you look at 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%-20 percent of your earnings on car expenses.
If you notice you're spending too much or you're looking to cut back on spending, look at the most expensive items first, and start to look at costs you can control.
Payment for your car. Consider refinancing your loan to see whether you are eligible to receive a better interest rate. This can lower your monthly installment.
Insurance premiums. Contact your current insurance company about discounts that might be available. If they won't assist you in obtaining an improved rate, request quotes from other insurance companies to find a better price for your coverage.
Gas. Pay attention to gas prices by using a to locate the lowest prices and use .

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Authors' Bio: Whitney Vandiver is a writer for NerdWallet currently focusing on maintenance and car ownership. She has previously written about payments for small businesses and payment.


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




Methodology
The estimates and averages that are used to populate this calculator are derived from a variety of sources.
Estimates for used and new car payments are from Experian's Q3 report 2022.
AAA's most recent research provides annual average costs for a wide range of automobile-related expenses. AAA figures are based on a new vehicle owned for five years, and driven 15,000 miles per year. These figures have been converted into monthly sums. The monthly total cost of car calculator utilizes AAA data for the following monthly averages:
- Gas
- - Insurance
License, registration and fees
Repair, maintenance and tires







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