Calculating the moolah your four-wheeled buddy demands might be trickier than deciphering alien hieroglyphs, what with skyrocketing car prices, loan rates that rise faster than your favorite soufflé, and the relentless pursuit of gas prices scaling ever-higher peaks. Are you curious to know how much your beloved ride costs you? Read our comprehensive guide on the ever-confounding realm of costs of car ownership!
The simplest method to ensure your car budget is in order is to calculate the cost of owning a current car or one you might buy shortly. However, it might be challenging to determine exactly how much your car is costing you due to rising car prices, increasing loan rates, and rising gas expenses.
What will you read here? The average monthly payment, typical ownership costs, and how to save money while still driving a car you love are all included in this guide.
How Much Does Owning a Car Cost?
Recent years have seen a significant increase in the price of buying a new or used car due to supply chain concerns and inflation. The average price of a used car was $26229 as of March 2023. The typical price of a new car was $48018.
Many drivers are still stretching their budgets to move about, even though car prices were marginally lower than at the end of 2022. Additionally, when buying a car, the sticker price is simply the beginning of a lengthy list of associated costs.
A car owner must additionally pay for insurance, gas, maintenance, and other costs. The car cost increased from $9,666 in 2021 to $10,728 in 2022.
What Is the Average Cost per Month?
In the first quarter of 2023, a new car’s average monthly cost was $725. That represents a $75 increase from the prior year. Owning a used car was the most affordable choice, with an average monthly cost of $516. Leasing a new car was less expensive at $586 per month. Whether you decide to finance or lease a car, you’ll probably pay more than $500 a month regardless of your decision.
But the real expense of owning a car is much higher.
The cost of owning a car increases significantly when you factor in loan interest, depreciation, fuel, insurance, maintenance, and fees. In 2022, a new car driven 15,000 miles per year costs an average of $10,728 per year, or $894 per month, to own.
Is the Joy of Driving Worth the Toll on Your Wallet?
No matter what kind of car you have, you have to pay for these things regularly:
Fuel is one of the costs of moving that changes the most, with prices increasing almost daily. Early in 2022, regular unleaded gas cost about 18 cents per mile on average. That works up to $2,700 annually for a 15,000-mile year only in fuel.
The good news is that the average gas price changes greatly based on what kind of car you drive and how big it is. In general, sedans have higher fuel economy than larger cars and trucks, such as SUVs, and paying attention to your gas buy can help you save money at the pump.
A new car’s average monthly repairs, maintenance, and tires cost $121. Common upkeep costs include oil changes and tire rotations, usually done every 5,000 miles or, in this case, three times a year.
While wear and tear will likely require you to pay for routine maintenance, you won’t have to pay for some repairs if your car is still covered by the manufacturer or extended warranty. A manufacturer’s protection usually lasts three years or 36,000 miles, whichever comes first.
Set aside some cash for repairs if a warranty doesn’t cover your car, whether you need them every month or not. This prevents you from getting a surprise bill when unscheduled maintenance is required.
Taxes, Fees, and Registration
An average auto owner used to spend about $675 in 2022 on licenses, registration, and taxes to lawfully drive their car.
Each state has rules about how these fees are set, how often they must be paid, and how much they cost. The amount you must pay annually for this category depends on where you live and the fees you must pay.
Almost all states mandate some form of auto insurance. Americans spend $1557 on their full coverage insurance premiums each year.
However, the insurance cost affects several variables, including the chosen coverage, the kind of vehicle you drive, your age, your driving history, and your region. Depending on your situation and available coverage alternatives, you may spend more or less than the average rate.
Cars typically depreciate over time, even though depreciation isn’t a payment that requires you to make a monetary payment. This indicates that you are gradually losing money, which impacts your overall cost of ownership.
It’s critical to remember that the current auto market is distinct in that depreciation has decreased, albeit this is likely to reverse. Some vehicles throughout the past year have been worth more used than they were when they were new, depending on the model of the car and the market demand.
In contrast, cars typically lose 15% to 20% of their value in the first year on the market. Depreciation will occur at a rate of roughly 15% annually for the following four years.
Depreciation is a cost of ownership when you sell your car, even if it isn’t money you pay out of your pocket.
Compare current offers for the same make and model to the price you initially paid for the car to indicate how much it has depreciated. Through a service like Kelley Blue Book, you may determine the resale value of your car. Alternatively, request a cash offer from an online or nearby dealer.
While there are strategies to prevent automotive depreciation, once you purchase your car, you often have less influence over this expense.
Tips on How to Save on Car Ownership
Despite the high cost of car ownership, owners may be able to make some financial adjustments:
Compare Auto Insurance Rates
Different insurance companies use different algorithms to determine insurance prices, so depending on your unique rating variables and coverage requirements, some may offer you cheaper rates than others. You might reduce the cost of your premium by comparing quotes from other suppliers.
While the costs of car ownership might seem daunting, there’s a clever way to save big on one significant expense. Enter Way.com, your key to unlocking affordable car insurance. You could trim up to $971 off your annual car insurance bill by comparing quotes from various providers! So, while the road might always have twists and turns, at least your finances can enjoy a smoother ride.
Select the Right Car
The make and model of the car you buy could enable you to save money both now, with a lower purchase price, and later, with lower insurance, repair, and gas expenditures. When choosing a new vehicle, you should consider your lifestyle, local gas prices, customer evaluations, typical maintenance costs, and typical insurance rates.
Refinance Your Car Loan
Your auto loan can be refinanced at a lower interest rate. It would be a good idea to check whether the market has changed after the car was acquired to see whether a lower rate is available.
You can refinance your car loans through Way.com and turbocharge your budget. Slash up to $1850 off your annual expenses, giving your wallet a much-needed pit stop. Take control of your car ownership costs and hit the road to extra savings today!
Consolidate Your Driving Trips
The more you travel, the more maintenance and gas you’ll typically need to do on your car. Consolidating your errands into one trip, carpooling with friends and neighbors, and looking into public transportation choices might all be smart moves. Reduced auto insurance costs may also result from decreased driving, particularly if you participate in a telematics program.
Maintain Your Car
The best defense against expensive auto repairs is a good offense. Regular maintenance can assist in avoiding future greater repair expenses. Often, if problems are discovered quickly, repair expenses might be reduced.
Frequently Asked Questions
Which cars have the lowest ownership costs?
The cars with the lowest total ownership cost often have minimal maintenance expenses, good gas mileage, and a track record of dependability. You should be able to select a car that will fit your financial demands by conducting some research and has a reasonable cost of ownership. Consider affordable cars like the Nissan Versa, Mitsubishi Mirage, or Kia.
How can I get my auto insurance for less money?
Most insurance experts advise comparing prices from several providers to get the greatest deal on a policy. Investigate all the auto insurance discounts and packages that different insurance providers provide. Many carriers provide savings for something as basic as setting up auto-pay on your policy. Usually, you can save the most money by combining many insurance policies with one provider, including a car and house. Because your driving record affects your rates and suggests how risky of a driver you might be, keeping a clean driving record may also help you save money on your auto insurance.
How can I figure out my car’s total cost of ownership?
Consider taking an interest in monthly payments and the cost of the car into account when figuring up the overall cost of car ownership. Also, consider depreciation, gasoline expenditures, registration fees, maintenance costs, and insurance premiums. You can determine a monthly or yearly figure for the overall cost of automobile ownership by estimating these expenditures based on your lifestyle, vehicle choice, and local cost of living.
Why are new and used cars currently so expensive?
The average cost of cars is rising due to a shortage of manufacturing labor and computer chips used in many modern cars. Prices grow as a result of decreased vehicle production and steady demand. Buyers experience higher interest rates on their auto payments when they decide to buy a car, raising their overall purchase cost.
Harness the real power of real-time monitoring with the Way.com Super App. This app helps you find a parking spot, and get quotes for auto insurance and refinancing. You can also find the cheapest car wash and EV chargers near you, and get cash back on gas. Way.com will take care of everything you need for your car!
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