The Full Cost of Owning a Car
The price on the window is the smallest decision you’ll make about a car. What you actually pay shows up over years — in value the car quietly loses, in interest, insurance, fuel, repairs, and the taxes and fees that arrive every year whether you drive or not. Add it all up and the real number is far larger than the sticker.
AAA’s 2025 Your Driving Costs study puts the average cost of owning and operating a new vehicle at $11,577 a year — about $965 a month, or 28.9 cents for every mile — based on 15,000 miles a year, averaged across nine vehicle categories and 45 models. Over a typical five-year ownership that’s roughly $57,900, more than the $49,220 average price of a new car itself (Kelley Blue Book, May 2026).
This guide breaks that number down category by category, with current figures and where they come from, so you can see exactly where the money goes — and which costs you can actually move.
What a car costs per year
Here is the average annual breakdown for a new vehicle, from AAA’s 2025 study:
| Cost category | Annual cost |
|---|---|
| Depreciation | $4,334 |
| Insurance | $1,694 |
| Fuel | $1,950 |
| Maintenance, repairs & tires | $1,656 |
| Finance charges | $1,131 |
| License, registration & taxes | $813 |
| Total (AAA) | $11,577 |
AAA publishes fuel and maintenance/repairs/tires per mile — 13.0¢ and 11.04¢ respectively; both are shown here annualized at the study’s 15,000 miles a year. The other four lines are AAA’s published annual figures. The components round to AAA’s stated $11,577 total.
Two things stand out. First, depreciation alone is more than a third of the total — and it’s the cost most buyers never plan for, because no one ever sends a bill for it. Second, the costs you see every month (fuel, insurance) are smaller than the one you don’t. Your own number will move with the car, your mileage, your state, and your loan — but the shape of this breakdown holds for almost everyone.
Depreciation: the biggest cost nobody budgets for
Depreciation is the value your car loses as it ages — the gap between what you paid and what it’s worth when you sell or trade it. AAA puts it at $4,334 a year for a new vehicle, the single largest line in the budget and well ahead of anything you pay monthly.
It’s also the most front-loaded cost there is. A new car loses the largest share of its value in the first year and stays steepest through the first few, then the yearly loss flattens out. (For the year-by-year curve, see Car Depreciation by Year.)
The practical lesson follows directly: the two ways to cut depreciation are to buy a car that has already taken its biggest hit — a lightly used model a few years old — or to keep a car long enough that the yearly loss flattens. Buying new and selling after three years is the single most expensive ownership pattern.
Financing: what the loan adds
If you borrow, interest is a real cost on top of the price. AAA estimates finance charges at $1,131 a year, down about 15% from the year before as rates eased. As of Experian’s most recent State of the Automotive Finance Market figures (Q3 2025), the average interest rate was about 6.4% on a new-car loan and 11.3% on a used-car loan — a gap worth noting if you’re weighing new against used.
Two levers matter most. A longer loan term lowers the monthly payment but raises the total interest you pay, and it keeps you “underwater” — owing more than the car is worth — for longer. And the down payment has an opportunity cost: cash tied up in a depreciating asset is cash not earning anything elsewhere.
Whether financing tips the math toward buying or leasing depends on your specific price, rate, mileage, and how long you’ll keep the car. You can run both paths — including the resale value at the end and the opportunity cost of the cash — through our lease-vs-buy calculator.
Fuel: the cost that swings with the pump
AAA’s study assumes 13.0 cents per mile for fuel, based on regular gas averaging $3.151 a gallon — down sharply from the prior year. National prices move constantly; the U.S. Energy Information Administration’s 2026 outlook has projected averages near $3 a gallon, but your real cost depends on local prices and, above all, the car.
This is the category where the vehicle choice matters most. A fuel-efficient car can cost half what a large truck or SUV does per mile, and an electric vehicle changes the equation again: at a residential electricity price around 14 cents per kilowatt-hour (EIA), an efficient EV often runs only a few cents per mile to “fuel,” versus roughly 13 cents for gas — though that advantage shrinks on expensive public fast-charging. To see the energy cost for a specific model before you buy, check the EPA’s ratings at fueleconomy.gov. (A full EV-versus-gas cost comparison is a topic of its own; we’ll link a dedicated breakdown here when it’s published.)
Insurance: the line that varies most by who you are
AAA’s figure is $1,694 a year for a full-coverage policy on a new vehicle, for a driver under 65 with a clean record in a typical suburb or city. That’s a representative example, not your quote.
For a national reference point, the most recent NAIC data (via the Insurance Information Institute) puts the average auto-insurance expenditure at about $1,127 — lower than AAA’s figure largely because that average includes drivers who carry only liability rather than full coverage. Current full-coverage quote surveys for 2026 run higher still, commonly in the $2,000–$2,900 range depending on the data source and driver profile. The spread itself is the point: insurance varies more by state, age, driving record, and the car than almost any other cost — which makes it the line most worth re-shopping every year.
Maintenance, repairs & tires
AAA bundles these at 11.04 cents per mile — about $1,656 a year at 15,000 miles. That covers routine manufacturer-specified service, repairs to wear-and-tear items over five years, and one set of replacement tires.
For a new car the early years are cheap, because the factory warranty absorbs most major repairs. The cost climbs as the warranty expires and components wear — which is exactly why a car kept well past its loan often trades lower depreciation for higher upkeep. Maintenance and repair prices have also outpaced overall inflation in recent years (BLS Consumer Price Index), so today’s repair bill is a poor guide to one a few years out.
Registration, taxes & fees
AAA puts license, registration, and taxes at $813 a year as a national average — a figure that blends the taxes and fees due at purchase with the annual cost of keeping the car registered.
This is the most location-dependent cost on the list. Sales tax at purchase alone ranges from zero in a handful of states to over 10% with local add-ons, and annual registration fees — plus, in some states, a personal-property tax or a special EV fee — vary widely. If you’re comparing cars or considering a move, this line can swing by thousands.
The five-year picture
Stretch the annual breakdown across a typical five-year ownership and the total comes to about $57,900 — the recap table at the end of this guide lays out each category. The number lands higher than most people expect because the two biggest contributors, depreciation and insurance, are the two that never show up as a single, memorable bill.
How the total changes with the car you choose
The averages above describe a “typical” new car. Your number can land well above or below them depending on what you buy:
- New vs. used. A used car skips the steep first-year depreciation, which is the largest single saving available — but it usually carries a higher loan rate (roughly 11% vs. 6%) and more out-of-warranty repairs. The net often still favors used, but not always.
- EV vs. gas. Electric vehicles typically cost less to fuel and maintain, but can carry a higher purchase price and a different depreciation pattern. The break-even depends heavily on your mileage and electricity price.
- Size and weight. Larger, heavier vehicles cost more across nearly every line — fuel, insurance, tires, and often depreciation.
We’ll link dedicated comparisons for the new-vs-used and EV-vs-gas decisions here as they’re published.
How to lower your total cost of ownership
- Keep the car longer. Spreading depreciation and purchase taxes over more years is the biggest lever most people have.
- Buy lightly used. Let the first owner absorb the first-year depreciation cliff.
- Shop the loan and keep the term short. A lower rate and fewer years cut total interest sharply.
- Re-shop insurance every year. It’s the cost that varies most, and loyalty rarely pays.
- Stay ahead of maintenance. Routine service is far cheaper than the repairs it prevents.
- Weigh fuel cost per mile when choosing. It compounds over every mile you’ll ever drive.
Run your own numbers
Averages are a starting point, not your answer. Plug in your actual price, loan rate, mileage, and expected resale and the lease-vs-buy calculator will show the full multi-year cost of buying versus leasing — including the year the cheaper path flips.