What Is the Total Cost of Owning a Car?

Total car costs include a lot more than a loan payment. Use NerdWallet’s calculator to see how much you’re spending.
What Is the Total Cost of Owning a Car?

Many or all of the products featured here are from our partners who compensate us. This may influence 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.

Calculating the total cost of owning your car — or one you might buy soon — is the best way to make sure your auto budget is in line. But with soaring car prices, higher interest rates and jumping gas prices, it can be difficult to know exactly how much your car is costing you.

Here’s what you need to know about the cost of owning a car, including the average monthly payment, common ownership costs and how to go about saving money while still driving a car you love.

Average monthly cost

The average monthly payment on a new car was $700 in the third quarter of 2022, according to credit reporting agency Experian. That’s an increase of $91 over the previous year. Leasing a new car was cheaper at $497 a month, and owning a used car was the cheapest option, with an average monthly payment of $525. Regardless of your choice, you’re still likely to be paying over $500 a month if you finance a vehicle purchase.

But that’s far from the true cost to own a car.

When you take into account loan interest, depreciation, fuel, insurance, maintenance and fees, the cost of owning a car makes a big leap. For new vehicles driven 15,000 miles a year, average car ownership costs were $10,728 a year, or $894 a month, in 2022, according to AAA.

Average...

New cars

Used cars

Leases (new)

Monthly payment

$700.

$525.

$567.

Loan amount

$41,665.

$28,506.

N/A.

Loan term

69.73 months.

68.08 months.

35.86 months.

Source: State of the Automotive Finance Market, Experian Information Solutions Inc.

Common costs of owning a car

Regardless of the car you drive, you’re likely to have to pay for these items on a regular basis.

Gas

With prices changing almost daily, fuel is one of the most variable costs of driving a car. According to AAA, the average driver paid around 18 cents a mile for regular unleaded gas in early 2022. Over a 15,000-mile year, that’s $2,700 annually just in fuel.

The good news is that average fuel costs often vary by the type and size of vehicle. Sedans tend to get better gas mileage than bigger vehicles like trucks and SUVs, for example, and being mindful about how you purchase gas can save money at the pump.

Maintenance and repairs

However, the average cost of repairs, maintenance and tires is $121 a month for a new car, according to AAA. Common maintenance costs include oil changes and tire rotations, which are usually done at 5,000-mile intervals or, in this scenario, three times each year.

While you’ll likely need to pay for your normal maintenance brought on by wear and tear, you won’t have to pay for certain repair costs if your car is still under the factory warranty or an extended warranty. Manufacturer warranties are typically for three years or 36,000 miles, whichever you hit first.

If your car isn’t under warranty, set aside some money for repairs, whether they’re needed each month or not. This keeps you from being hit with an unexpected bill when irregular maintenance is needed.

Registration, fees and taxes

According to AAA, the average car owner will pay $675 in 2022 for licensing, registration and taxes to legally drive their vehicle.

How these fees are calculated, how often they are paid and how much they cost vary by state. Where you live and the type of fees you have to pay will determine how much you have to pay annually for this category.

Insurance

Almost every state requires some auto insurance coverage. The average annual premium for full-coverage insurance runs Americans $1,588, according to AAA.

But the cost of insurance is influenced by several factors, including the selected coverage, the type of car you drive, your age, your driving record and your location. Depending on your circumstances and coverage options, you might pay more or less than the average premium.

Depreciation

Although depreciation isn’t a payment that has you shelling out cash, cars usually do lose value over time. This means you are losing money over time, and it affects your total cost of ownership.

It's important to note that the current car market is a unique one where depreciation has shrunk, though this is likely to change in the near future. In some cases, depending on the model of car and market demand, some vehicles over the past year have been worth more used than they were when they were new..

But in a normal market, cars lose around 15% to 20% of their value in their first year. Over each of the next four years, depreciation will be around 15% per year.

So while depreciation isn’t money you’re paying out of your pocket, it is a cost of owning a car when you go to resell the vehicle.

To get an idea of how much your car has depreciated, compare current offers on the same make and model to what you paid for it originally. You can find your car’s resale value through a service such as Kelley Blue Book. Or get a cash offer from a local dealer or an online buyer such as Carvana or Vroom..

While there are ways to manage car depreciation, you generally have less control over this expense once you own your vehicle.

How to calculate your total cost of car ownership

You can use our calculator to see how much your car is costing you each month. The calculator is pre-populated with estimates based on 15,000 miles of driving per year, so we strongly urge you to enter your exact expenses to see your total car costs.

Monthly car payments and insurance premiums are self-explanatory, but here’s more information on estimating other costs of car ownership.

Gas. If you know how much you usually spend on fuel, enter that amount in the calculator. Otherwise, divide the number of miles you drive each month by your car’s fuel economy rating, available on FuelEconomy.gov. Multiply that number by the price of a gallon of gas in your area.

Maintenance and repairs. You can go with the monthly average that’s pre-populated based on AAA’s data. But if your car has needed a lot of work lately and is costing you more than $1,500 a year in work, go ahead and calculate the exact figure for what you’ve paid in the past 12 months and enter it here.

Registration, fees, taxes and miscellaneous. This part is easy: Just put in your annual motor vehicle registration renewal amount, divided by 12. Add any other recurring expenses such as parking costs.

*Note: The total car cost calculator is pre-populated with estimates based on data from Experian and AAA. See our methodology below.

Saving on your biggest car costs

By reviewing the total cost of ownership, you can see the portion of income that goes toward your car each month. It’s best to spend less than 15% to 20% of your take-home pay on vehicle costs.

If you find you’re over your car budget or if you want to reduce spending, look at your big-ticket items first and work your way through costs you can control.

  • Car payment. Look into refinancing your loan to see if you can qualify for a better rate. This can bring down your monthly payment.

  • Insurance premiums. Talk with your current insurance provider about potential discounts. If they won’t help you get a better rate, get quotes from other insurers to locate a better deal on your coverage.

  • Gas. Pay attention to gas prices by using a gas price app to locate the cheapest prices, and use a credit card that offers the biggest discount.

Methodology

The averages and estimates used to pre-populate this calculator come from several sources.

  • Estimates for new and used car payments are from Experian’s Q3 2022 State of the Automotive Finance Market report.

  • AAA’s most recent Your Driving Costs study provides annual average costs for a variety of car-related expenses. AAA information is based on a new vehicle owned for five years and driven 15,000 miles a year. We’ve converted these figures to monthly amounts. The total monthly car cost calculator uses AAA data for the following monthly averages:

    - Gas - Insurance - License, registration and fees - Maintenance, repair and tires

Get more smart money moves – straight to your inbox
Sign up and we’ll send you Nerdy articles about the money topics that matter most to you along with other ways to help you get more from your money.