Average Cost of Owning a Car

The average cost of owning a car in the U.S. has risen to $12,182 per year ($1,015 per month), according to a 2023 American Automobile Association (AAA) report. This marks a significant 13% increase from the 2022 average of $10,728 annually ($894 per month). Growing expenses across categories like fuel, insurance and maintenance have contributed to this rise.

Factors such as vehicle type and usage heavily influence the total cost of ownership, so it’s important to account for all potential costs before purchasing a vehicle. Understanding these expenses helps you determine whether owning a car fits within your budget and financial plans.

The average cost of car ownership varies significantly depending on the type of vehicle you drive. Generally, the larger the car, the higher the total cost of ownership due to increased expenses for maintenance and fuel.

According to AAA, half-ton pickups have the highest annual maintenance cost at $15,858, whereas small sedans are the least expensive at $8,939 per year.

Note: Costs are calculated based on 15,000 miles driven annually. Source: American Automobile Association.

The cost of owning a car extends beyond loan payments and fuel. Insurance, license and registration fees, maintenance and other expenses all contribute to the total cost of ownership.

Below is an overview of the average costs associated with car ownership. Accurately accounting for these expenses helps you stay on top of your budget.

Source: American Automobile Association

To calculate the total cost of owning a car, consider both operating costs and ownership costs. Operating costs include fuel and maintenance, while ownership costs cover taxes, fees, insurance, financing and depreciation. Although averages provide a good benchmark, examining your specific expenses will give you a clearer understanding of what owning a car costs you each year.

Operating costs, otherwise known as variable costs, are expenses incurred only when you drive your vehicle. Typically, these include gas, maintenance and repair costs.

Calculating the cost of gas per mile can give you valuable insight into your fuel expenses. To determine this, you can calculate two key figures: miles per gallon and cents per mile. This information can tell you how much to budget for gas when evaluating the cost of owning a car.

To calculate how many miles are possible per gallon, take the total number of miles you’ve driven and divide that by the total number of gallons for a full tank.

To calculate the dollar amount or cents per mile, divide the total cost of a full tank by the total number of miles driven.

**Average gas price as of August 10, 2024. Source: American Automobile Association Gas Prices.

Using the table above as an example, assume you drove 397 miles, and it takes 21 gallons to fill your tank. Following the miles per gallon formula, you can drive about 18 miles per gallon.

However, if you want to calculate the dollar amount per mile or the cents per mile, divide the cost of a full tank by the total miles driven. In this example, assume that it costs $79.80 to fill your tank. If you drive 397 miles, the cost per mile is 20 cents.

The cost of car ownership involves other fees and requirements to own and operate a car. This includes auto insurance, registration and license fees, taxes and any charges associated with your auto loan. Depreciation, which is the loss of your vehicle’s value every year, is another consideration. It can impact the resale value of your car if and when you decide to sell it.

Here is a breakdown of the average ownership costs for a medium sedan, highlighting the key expenses involved:

Source: American Automobile Association

From 2012 to 2017, the average cost of car ownership gradually declined, reaching its lowest in 2017 at $8,468. However, there's a noticeable upward trend post-2017, culminating in a significant jump to $12,182 in 2023.

Source: Bureau of Transportation Statistics

The table showcases the yearly percentage change in car ownership costs:

• 2013 saw a modest increase of approximately 2% from the previous year.
• The years 2014 to 2017 observed a consistent decline, with the most significant drop in 2014 at around -3%.
• There's a clear upward trajectory starting from 2018. In 2019, there was a nearly 5% increase, and in 2020 and 2021, there were smaller incremental increases.
• 2023 saw the most substantial increase of 13% to $12,182 from $10,729 in 2022.

This substantial growth, especially in recent years, can be attributed to various factors. As highlighted in the article, escalating gas prices play a significant role. The sharp increase in 2022 underscores the impact of these heightened gas prices on the overall cost of owning a car.

From 2012 to 2017, the per-mile cost of car ownership displayed a steady decline, dropping to its lowest in 2017 at 56 cents per mile. However, starting from 2018, there's a clear upward trend, with 2022 witnessing a significant increase to 72 cents per mile.

This rise in per-mile costs, especially in recent years, can be attributed to factors such as gas prices' pivotal role in determining the overall cost of owning a car. The surge in 2022 emphasizes the influence of unprecedented gas price heights on the per-mile cost of ownership.

Source: Bureau of Transportation Statistics

The costs of car ownership can be confusing for first-time car buyers. Read our answers to frequently asked questions below to get a better understanding.

Managing the cost of car ownership can be challenging, especially since expenses go beyond just the purchase price and fuel. Explore these MoneyGeek resources to better manage the total cost of ownership and make informed decisions about your vehicle.

• First-Time Car Buyer's Guide: Get the Right Car for the Right Price: Buying your first car is an exciting milestone, but weighing which kind of car to buy, when to buy and where to buy it is challenging. MoneyGeek can help you anticipate costs and determine how to make the best decision for you.
• Ultimate Guide to Purchasing a Used Car: It's fun to visualize yourself in a new (or brand-new-to-you) car, but you don’t want to end up making the wrong decision. MoneyGeek can help you determine what to look for when buying a used car.
• Cheapest Car Insurance Companies: Purchasing auto insurance is a must, but if you’re on a budget, you’ll want to opt for the lowest offer. Review MoneyGeek’s lineup of the most affordable auto insurance companies available.
• Do You Need Auto Insurance Before Buying a Car?: Before you drive off the lot with your new car, you must purchase auto insurance if you don't already have it. Many people wait until signing on a car to get car insurance, but it's better to compare coverages well in advance.
• Used Car Insurance: Everything You Need to Know: If you’re looking to find the most affordable insurance for a used car, review this guide from MoneyGeek. Find out how to buy used car insurance and get the lowest price.
• Car Ownership Statistics in the U.S.: Gain insights into the cost of owning a car and other key statistics. MoneyGeek provides data that can help you understand the broader financial impact of car ownership.
• How Much Does a New Car Cost?: Curious about the average cost of a car in the U.S.? This resource breaks down the latest data, helping you make informed decisions when buying a new vehicle.
• Average Cost of Car Insurance: Learn about the average cost of car insurance by month and year. This guide provides valuable benchmarks to help you find the best insurance rates.
• How Much Does Car Maintenance Cost?: Car maintenance is a significant part of the total cost of ownership. This comprehensive resource will help you discover typical maintenance expenses for your vehicle.