Buying a New Car? Prepare for Over $10K in Yearly Ownership Costs
Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
The annual cost of owning and operating a new car ballooned nearly 11% in the past year to $10,728 — or $894 per month — according to AAA's Your Driving Costs study.
That represents a considerable hike from 2021, when it cost an estimated $9,666, or $805 per month, to own a new car. Costs normally don’t rise that dramatically year over year: In 2021, annual new car ownership costs rose 5% over 2020’s figures, according to AAA.
The cost estimate in the 2022 study doesn't include the monthly principal payment for those who take out a loan, so drivers will want to make sure to budget for the full cost of car ownership when buying a new car.
Why is it more expensive to own a new car?
Unsurprisingly, the AAA report cited fuel prices as the main culprit behind this year's sky-high rise. Gas prices climbed steadily for more than a year before peaking at an average of over $5 a gallon in June, and U.S. drivers are on track to spend up to $562 billion on gasoline this year — twice as much as they spent on gasoline in 2020. The growing price of gas is being fueled by overall inflation, as well as by supply-chain impacts from Russia’s invasion of Ukraine.
The costs of all goods and services in the U.S. is up 8.5% year over year, according to the Bureau of Labor Statistics, and gas prices rose a whopping 44% over the same period. National pump prices have eased to an average of $3.95 per gallon (regular unleaded), which is still considerably higher than the $3.18 a gallon in August 2021.
The AAA report, released Aug. 11, assumed an average fuel price of 17.99 cents per mile, or roughly $3.99 per gallon, based on a weighted average of gas prices in the first five months of 2022. Gas prices continued their climb after the report was conducted (and remain volatile), and AAA said in a press release that new car ownership costs for 2022 may end higher than the report estimates.
Additional factors affecting costs
Per-mile fuel prices vary widely by type of vehicle, of course, ranging from 12.51 cents per mile for a small sedan to 24.63 cents for a half-ton pickup. Where you live makes a difference, too, with current average prices ranging from a low of $3.46 a gallon in Texas to $5.37 a gallon in California.
AAA evaluated 45 top-selling midpriced vehicles across six categories. While insurance prices saw larger increases in 2022, other ownership costs rose more modestly:
Depreciation: $3,900 a year ($3,656 in 2021).
Finance: $712 a year ($658 in 2021).
Fuel: 17.99 cents per mile (10.72 cents per mile in 2021).
Insurance: $1,588 a year ($1,342 in 2021).
License, registration and taxes: $675 a year ($669 in 2021).
Maintenance, repair and tires: 9.68 cents per mile (9.55 cents per mile in 2021).
The average Manufacturer's Suggested Retail Price — or MSRP — of a new vehicle is $33,301 in 2022 versus $32,903 in 2021, according to AAA. The study assumed vehicles would be driven roughly 15,000 miles per year and be owned for five years.
How can I save money on new car ownership costs?
Drivers who prefer a new car to a used car can consider switching to an electric vehicle or hybrid vehicle. It would cost approximately $600 per year to charge an electric vehicle, AAA estimates, compared with the $2,100 per year to fill up a gas tank. Of course, electric vehicles can often be expensive, so make sure the fuel savings aren't canceled out by the overall cost of the car.
You can also download a gas app, such as GasBuddy or Upside, to help you find the most affordable gas in your area.
On an overall basis, a small gas-powered sedan has the cheapest ownership costs at 54.56 cents per mile, compared with 60.32 cents for an electric car and 64.61 cents for a hybrid, according to the AAA study. A half-ton pickup tops the list at 86.21 cents per mile.
You can check for cheaper insurance rates, too. A NerdWallet survey from 2017 found that roughly 43% of insured drivers hadn’t shopped for new insurance in at least a year, even though shopping for better deals could’ve yielded savings as high as $400 per year.