Key Takeaways
Before purchasing a car, you should have detailed knowledge about the total cost of owning a car. With high interest rates, rising car price and gas price, you may find it difficult to calculate the exact costs. Here, we will help you know more about common costs of owning a car and method to calculate the total cost of car ownership.
There are certain obvious costs associated with car ownership, but it may be possible to reduce these expenses. Here are some of the associated costs.
Based on the estimates from AAA, the average cost of license, registration, and taxes for a car is projected to be $685.
The amount of these fees, how often they are paid, and how they are computed varies from state to state. The yearly total in this section will vary depending on factors such as the type of fees you have to pay and the location in which you live.
Based on the reports, it is found that the combined maintenance and repair cost each year is found to be higher than the previous year. According to AAA, the average routine maintenance costs per mile in 2022 was $10.18 cents and the annual repair cost was $1435.
Avoid unwanted usage of cars to reduce the wear and tear and thereby the costs involved in its maintenance.
It cost you around $1,611 per year for full coverage car insurance and the premium charges may varies based on your location, your insurance company, your driving history, your vehicle type, and the type of insurance coverage you choose. Choose the right type and amount of insurance coverage by having a good conversation with an insurance agent.
According to AAA, the average annual depreciation cost was found to be around $3900 in 2021. This value varies widely.
Fuel prices across the country hit a high of well over $5.50 per gallon in mid-June 2022, but have since dropped to an average of $4.33 per gallon as of October 5, 2022, as reported by the AAA. Yet, several jurisdictions continue to grapple with significantly greater costs. When budgeting for petrol, it's important to consider not just how far you drive each day, but also how far you drive each week on average.
After financing a car purchase, you will have to spend more than $500 every month. A used car purchase will cost you less than a new car purchase but used cars will involve more maintenance and repair costs.
Total cost of ownership includes the purchase price and other additional operating expenses like gas costs, registration fees, maintenance and repair and other miscellaneous costs.
How much you spend on gas can be estimated by looking at the gas price per mile. Two outputs are possible: miles per gallon (MPG) and cents per mile. By estimating this value, you can reduce the expenses on gas while evaluating the overall cost of car ownership.
Take the total number of miles driven and divide it by the number of gallons in the tank to get an estimate of your MPG.
Simply divide the full tank price by the number of miles driven to get the monetary value, expressed in cents per mile.
Based on the type of vehicle, the average cost involved varies. Given below are some of the vehicle types and the corresponding average maintenance costs.
| Vehicle Type | Average Annual Ownership Cost |
|---|---|
| Electric | $8,330 |
| Small Sedan | $7,124 |
| Medium Sedan | $8,653 |
| Large Sedan | $10,413 |
| Hybrid | $7,746 |
| Small SUV | $8,404 |
| Medium SUV | $10,275 |
| Minivan | $10,046 |
| Pickup | $10,849 |
You know that car ownership costs are high but you can still save through the following ways:
Compare quotes from multiple insurance providers and choose the one that offers cheaper rates.
It may be possible to refinance your car loan at a reduced interest rate. If the market has altered significantly since you bought the car, you might want to see if a better rate is now available through refinancing.
Performing regular upkeep could save money on costly repairs later on. As with many things, if problems are caught early on, the costs of fixing them tend to be lower.
The listed price of a vehicle is simply one aspect when evaluating the entire cost of owning an automobile. Expenses like car insurance, gas and maintenance can push up your monthly bills. Do proper research and get an idea of the costs involved and to make sure you can stay within your car budget.
Owning a car can cost you more than $500 every month. There will be additional charges which include maintenance, repair, and fuel costs.
The average cost of license, registration, and taxes of about $685.
Total cost of ownership (TCO) is determined by adding the purchase price to the yearly operating expenses during the asset's useful life.
To find the gas price, calculate miles per gallon (MPG) and cents per mile.