The Real Cost of Owning a New Car

As inflation hits hard, it’s becoming more expensive to get by on a day-to-day basis. One of those necessary daily expenses is your car —  and everything that comes with it. From gas to oil changes, new tires, maintenance and repairs, your car costs much more than just the MSRP. Of course, the car payment eats up a large chunk of the budget. According to AAA, the average monthly payment on a new car in the second quarter of 2021 was $575. 

So, what’s the real cost of owning a car? (Hint: much more than you’re expecting)

AAA estimates that the average sedan that’s driven about 15,000 miles per year costs just under $10,000 per year to own — that’s a lot of change!

This statistic includes loan interest, depreciation, fuel, insurance, maintenance and fees. Let’s break down these expenses further:


As prices rise, fuel is always at the top of the list. Getting from point A to point B just doesn’t cost what it used to. Fuel prices fluctuate quite widely based on location, so when it comes to estimating what you’ll spend per year on gas, find an online calculator that will let you plug in your location. Most online calculators will help you determine an average monthly gas cost based on the number of miles you drive and the type of car you drive, as well as where you drive. Choosing a fuel-efficient car that gets excellent gas mileage can help you save money, especially if you’re a driver who takes frequent road trips.

Car Payment and Interest

Your monthly car note amount will depend on what car you choose and how much money you put down to purchase the vehicle, as well as interest and other financial factors, such as taxes. Newer cars generally have a lower interest rate when compared to purchasing pre-owned vehicles. Trying to get the lowest possible interest rate on a new car will help you save money over time.

Maintenance and Repairs

If your car is brand new, some maintenance and repairs may be covered under the manufacturer’s warranty. You may also have had the option to purchase an additional extended warranty, depending on what type of vehicle you have. The good news is that newer cars require less overall maintenance than older vehicles. 

On average, AAA estimates monthly repair and maintenance costs are around $112.50. The maintenance required for your car includes things like oil changes, tire rotations, winter tires, new batteries, etc. This number will also fluctuate depending on wear, location and other factors based on your vehicle usage.


As soon as you drive your new vehicle off the lot, it starts losing value.  In the first year of owning a new car, it is estimated that an average vehicle will depreciate by about 20 to 30% of its original value. Each year after that, it may depreciate between 15 to 18%. If you’re wondering how much your car will depreciate or its current value, a variety of online tools are available to help you estimate the current value of your vehicle, including depreciation. 

Some car models are less likely to depreciate when compared to others, so choosing a car that will retain its value can be a smart choice. When shopping around, research the deprecation estimate for the specific model you’re looking for to get an idea of how fast it will depreciate.


Your monthly car insurance payments will vary based on several different factors, including your age, type of car, location, miles driven, driving history and habits and so forth. To save the most money, be sure to shop around and pick the auto insurance that is best for you and your driving needs.

Looking for auto insurance for your new vehicle? Check out the best way to shop for auto insurance to learn important information about the 12 best car insurance companies this year. This guide can help you save money and be smart about paying for auto insurance!

Registration and Fees

Every state has its regulations and rules when it comes to vehicle registration. To get a better idea of how much this will cost, check out your state’s DMV or MVC website to learn more. Don’t forget, there’s an initial cost to register your vehicle (and taxes to pay), but you’ll also be required to renew your registration annually — another cost that fluctuates by state.

After reading through our breakdown of various expenses associated with owning a new car, you should be able to create a more accurate budget to see if purchasing a new car can be affordable for you. If you’re looking to keep your costs down as much as possible, aim to control the factors that are easiest to mitigate and that cost the most, including the monthly payment and insurance premiums. Check out this post to learn some more money-saving tips for your new vehicle and good luck!

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