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The Real Cost of Owning a Car, Take Into Consideration Depreciation, Insurance, Gasoline, & Repair Expenses

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Updated November 15th, 2020

The cost of owning a car makes up a huge portion of each family’s budget. While paying for the car is clearly the most obvious and arguably the bigger expense, overall car ownership costs go way beyond that.

What Are the True Costs & Expenses of Owning a Vehicle?

In addition to the car purchase, there are many operating costs, that include maintenance, repairs, fuel, and insurance. When you add up the cost of these expenses, you realize that your car drains hundreds of dollars from your monthly income.

The AAA recently released its annual report (PDF) on driving costs in 2016, that shows just how expensive owning a car is. The auto club has calculated the average driving costs for sedans, minivans, and SUVs, taking into account costs like fuel, maintenance, tires, insurance, depreciation, finance, license and registration fees, and taxes.

Real Cost of Owning a Car Table

 Year 1Year 2Year 33yr Total
Taxes & Fees$498$55$55$608
Actual Cost to Own$7,086$6,309$6,456$19,851

Note: This is a 2011 Ford Super Cab and if you head on over to Edmunds.com you will see it cost $34,000 over 5 years to own it. The vehicle was driven 12,000 to 15,000 miles per year.

Approximate Expenses of Car Repairs, Insurance, & Gasoline by State

Alaska $341$1,077$730
Arizona $362$963$888
Arkansas $361$813$1,055
California $390$906$940
Connecticut $385$1,058$929
Delaware $314$1,110$967
Florida $377$1,124$1,015
Georgia $385$927$1,096
Hawaii $370$906$869
Idaho $349$664$988
Indiana $329$709$1,162
Iowa $315$630$998
Kansas $352$764$991
Louisiana $354$1,277$924
Maine $328$682$1,109
Maryland $388$1,030$951
Massachusetts $358$984$827
Michigan $317$1,064$994
Minnesota $346$782$1,033
Mississippi $356$901$1,231
Missouri $353$780$1,099
Nebraska $347$709$1,025
Nevada $364$1,078$771
New Hampshire $328$767$975
New Jersey $393$1,244$783
New Mexico $345$895$1,131
New York $365$1,196$713
North Carolina $390$708$1,032
North Dakota $344$662$1,207
Ohio $328$698$947
Oklahoma $338$839$1,175
Oregon $380$807$893
Rhode Island $371$1,142$800
South Carolina $368$860$958
South Dakota $312$654$1,056
Tennessee $353$762$1,021
Texas $364$1,001$860
Utah $371$810$918
Vermont $270$730$1,178
Virginia $382$758$964
Washington $375$910$866
West Virginia $310$975$1,033
Wisconsin $329$658$1,031

Car Ownership Rises to Nearly $1,000 Per Month

According to the AAA, the average operating costs for those who own a lower-priced midsize sedan, such as the Toyota Camry and the Ford Fusion, which are among the most popular cars in this segment, are $760 a month, which amounts to $9,150 a year.

These figures are based on the average amount of miles driven by an American worker, which is somewhere around 15,000 miles.

While midsize sedan owners might think that spending almost $10,000 on their cars each year is a lot, it’s even more expensive for owners of SUVs and minivans.

SUV Type Vehicles Cost Nearly $2,000 More Per Year

The AAA says that those who own an SUV, such as a Ford Explorer, or a Jeep Grand Cherokee, spend an average of $967 a month, or $11,600 per year, almost $2,000 more than what those who drive midsize sedans pay.

Of all costs associated with owning a car, depreciation is the biggest expense, but it’s also the most overlooked cost, according to Michael Calkins, manager, technical services at AAA in Heathrow, Florida.

Cars’ value decreases sharply the minute they are driven off a dealership’s lot. According to some estimates, new cars lose about 25% of their value right after they are sold.

Most Costly Automobile Repairs by Rank

Fuel Injectors
Cylinder Head Gasket
Timing Belt
Fuel pump
Engine control unit
Seized engine
Flywheel and clutch
Diesel particulate filter

Why You Should Buy Used & Not New to Save a Ton of Money

That’s why the AAA recommends that people buy used, instead of new cars, if they want to reduce their costs. Also, car buyers are advised to do their research and see which cars hold their value the most, and Mr. Calkins says that Toyota Camry and Honda Accord are some of the cars that depreciate the least.

This graph illustrated the depreciation of a vehicle over a 20 year period. Reaching nearly 0 at 20 years.

As illustrated by the graph the biggest depreciation for a vehicle is the first 4 years. Usually the best time to buy a used vehicle.

New & Used Car Advantages

New CarUsed Car
New-car shopping is easierLower car insurance rates
More financing optionsRegistry renewals are cheaper
Advanced technologyMove up to a luxury car
Peace of mindLess stress

When is the Best Time or Age of Vehicle to Buy?

Nowadays, it is best to buy a used vehicle which is 3 to 4 years old with 15,000 or less miles per year. This will maximize depreciation, but you still have a relatively “newer” vehicle.

Fuel Costs Take the Biggest Chunk of Car Ownership Expenses

Fuel costs are the next big expense. About 15% of 1-year ownership costs are attributed to fuel, which jumps to 24% after five years.

On top of buying a used car, the auto club suggests that car owners read the manual, to find out how they should maintain their cars properly, and what types of services they need, and when they need to be done.

Comparing Regular Gasoline Vehicle to Hybrid & Electrics Gasoline Expense

VehicleVehicle Technology EPAYearly
Fuel Cost
Toyota PriusParallel Hybrid$650
Tesla Model XElectric$700
Tesla Model SElectric$600
Honda Civic 1.5Regular Gasoline$1,000
Ford Fusion HybridParallel Hybrid$850
Volkswagen JettaRegular Gasoline$1,200
Ford Focus Electric*Electric$600
Honda Accord HybridGas / Electric$750
Chevrolet Impala 3.6LE85 & Gasoline$1,800
Chevrolet VoltSeries Plug-in Hybrid$650
Nissan LeafElectric$600

*1 gallon of gasoline=33.7 kWh according to Fueleconomy.gov

Note: Table compares small economy vehicles to electric and hybrid cars. The fuel savings are typically cut in half with alternative fuel vehicles.

Average Cost of Repairs for New & Used Vehicles


This graph shows how much it will cost to do major repairs to a vehicle. The high end and low end cost for each repair.

Note: All of the costs in the chart, illustrated above & below, can be mitigated with regular schedule maintenance of your vehicle.

This is a second graph showing the cost of major auto repairs. The high end cost and the low end cost for each repair.

This way, they will keep their cars in good shape with solid market value, and save a lot of money on maintenance in the long run.

More Car Maintenance Articles to Save

Simple Maintenance Things to do to Your Vehicle to Save
Vehicle Repairs to Bring to the Mechanic
Changing your Fuel Filter
Increase the Horsepower of Your Car
Easy way to Tint Your Car's Windows.
How Far Can Your Drive Your Vehicle While on "E"

Final Thoughts

One important thing to remember is that operating costs, such as fuel, maintenance, repair, and insurance, rise over time, whereas ownership costs, which include depreciation, insurance, taxes, and financing, start decreasing significantly five or six years after purchase.

Greg Fowler

Greg Fowler

Managing Member of AutoInsureSavings LLC, Greg has been in the insurance industry for 12 years and enjoys rebuilding vehicles. His goal is to help drivers save on anything related to automobiles. Travel and enjoying the outdoors are some of his hobbies. The best way to reach him is at his Twitter or Facebook Profile.

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