That ad about the newest car model seems pretty tempting, doesn’t it? It might even make you feel like it’s time to trade in your old car for a new, shinier one. Before you do, quick question. Without looking anything up, do you know how much you spend on your car each year?    

If the number that comes to your mind is your car payment, you might be surprised to find out that it’s only part of what a car costs you.    

Kelly Blue Book says the average five-year cost to own for new vehicles is $80,238, which comes to about $16,000 a year.

These estimates also don’t fully capture how sharply gas prices have climbed this year. 

What you pay before you even leave the dealership  

The average new car price set a record in December 2025 at $50,614, according to Kelley Blue Book. That’s not all you’ll end up paying. There are a few extra costs that don’t always get much attention in car ads.  

Let’s start with the sales tax. Rates vary a lot from state to state. In Texas, the sales tax is 6.25%, which comes to around $3,160 on the average new car. Delaware, Montana, New Hampshire, and Oregon don’t have a state sales tax, and neither does Alaska, though some Alaska localities charge their own.  

Dealers also charge a documentation fee for processing the paperwork. CarEdge, a car-buying advice company that has analyzed verified quotes from more than 23,000 dealers, puts the national average at $472. 

If you aren’t paying in cash, you also have the loan to think about. Edmunds reported that the average monthly payment for a new car was $777 between April and June 2026. The average buyer pays about $9,811 in interest over the life of the loan. 

The cost you never actually see  

Did you know your car loses its value just by existing? It’s called depreciation. According to Kelley Blue Book, the depreciation in year one is $7,200. On average, over the first two years, the depreciation rate for new cars is about 30%. They continue to depreciate 8-12% each year after. 

You won’t feel it day to day, but you’ll certainly notice it when you try to sell your car.

Driving less doesn’t necessarily make your car cheaper to own. If you drive fewer miles, the per-mile cost goes up, because fixed costs like insurance and depreciation don’t go away, even when your car sits collecting dust in your garage. 

Gas prices have surged year over year 

According to LendingTree, gas prices have gone up 39%, while diesel soared by 72%.   

Does it matter where you fill up? Absolutely.  

As of November 2, 2026, the price of regular gas is $5.29 per gallon and $7.27 for diesel in the West Coast. On the other hand, in the East Coast, the price of regular gas is $3.93 per gallon and for diesel, it’s $6.02.

That means the difference between the West Coast and East Coast is $1.36 per gallon for regular gas and $1.25 for diesel. 

Note: EIA updates its gas prices weekly. 

Repair prices aren’t getting any cheaper either  

When you own a car, repairs are pretty normal. But how much do you actually spend to get something fixed?  

Kelley Blue Book, using repair orders collected across the country, puts the average repair bill at $838. Of course, the actual cost depends on what’s wrong with your car and which parts need replacing.  

Here are a few examples of what common repairs can cost:  

  • Starter replacement: Around $744 to $837.  
  • Alternator replacement: Around $754 to $850.  
  • Brake pads and rotors: Around $549 to $629.  
  • Fuel pump replacement: Around $1,125 to $1,247.  

Repair costs also tend to rise as your car gets older. In Consumer Reports’ 2025 survey, Ford owners reported spending around $1,150 on maintenance and repairs during the first five years. Between years six and ten, that figure jumped to approximately $5,200. Over 10 years, reported maintenance and repair costs ranged from about $5,260 for Buick owners to $19,460 for Land Rover owners. Those figures don’t even include collision repairs.  

Meanwhile, Americans aren’t keen on replacing their vehicles. S&P Global Mobility’s 2025 analysis found that the average light vehicle on American roads is 12.8 years old, an all-time high. If you look at passenger cars alone, excluding SUVs and pickups, the average age is 14.5 years.  

Can’t forget about parking, tolls, and car washes  

Synchrony, a consumer lender, surveyed 1,030 car owners and asked them to guess what they spend each year on their cars, not counting loan or lease payments. The average guess was $2,738. The real average came to $7,303.  

The same survey found the average driver spends about $20 a month on parking, $19 a month on tolls, and $30 a month on car washes. Add them up, and it’s roughly $830 a year, nearly the price of one average repair. Younger drivers pay even more: Gen Z and Millennials spend $32 and $34 a month on parking, and $36 and $46 on car washes.  

Where you live affects how much you pay for insurance  

Insurify’s mid 2026 figures put the national average for full-coverage insurance at $2,237 a year. But drivers in Washington, D.C., pay an average of $3,880, while those in New Hampshire pay around $1,019. So, even if you drive the same car and have the same type of coverage, there’s essentially a difference of nearly $2,900 a year.   

Which states squeeze drivers the most?  

To see where the cost of owning a car takes the biggest bite out of household income, Way added up two costs nearly every driver pays each year (insurance and fuel) and compared the total with each state’s median household income. 

Rank   

 State    Insurance    Fuel    Total   

Share of median income   
1   Michigan   $3,229   $2,650   $5,879   8.1%  
2   Louisiana   $2,504   $2,170   $4,674   7.7%  
3   Nevada   $3,039   $3,069   $6,108   7.5%  
4   Mississippi   $2,211   $2,208   $4,419   7.5%  
5   Rhode Island   $3,611   $2,414   $6,025   7.2%  
6   South Carolina   $3,075   $2,141   $5,216   7.2%  
7   Kentucky   $2,302   $2,282   $4,584   7.1%  
8   West Virginia   $1,833   $2,437   $4,270   7.0%  
9   Georgia   $3,109   $2,095   $5,204   6.5%  
10   Arkansas   $1,829   $2,204   $4,033   6.5%  

Michigan tops the list. Drivers there spend around $5,879 a year on insurance and fuel, which eats up roughly 8.1% of the state’s median household income. That’s more than twice the 3.5% share in New Hampshire.  

Louisiana (7.7%), Nevada (7.5%), Mississippi (7.5%), and Rhode Island (7.2%) round out the five states where drivers feel the biggest squeeze. On the other end, Massachusetts (4.0%) and North Carolina (4.5%) are among the states where these expenses take a smaller share of household income.  

But looking at dollar amounts alone doesn’t tell the whole story. Washington, D.C., has the highest combined annual cost at $6,394, yet ranks 21st in our comparison. Why? Household incomes there are also the highest in the country, so insurance and fuel account for a smaller share of what drivers earn. 

How Way ranked the states  

Way compared 49 states and Washington, D.C., based on the share of median household income spent on full-coverage car insurance and fuel. Alaska was excluded because Insurify didn’t have enough insurance quotes to calculate a reliable average.  

For insurance, each state’s average annual full-coverage premium as of June 2026 was used, according to Insurify.  

For fuel, Way used AAA’s average regular gas price on November 2, 2026, multiplied by 586 gallons. That’s how much gas a driver would need to cover 15,000 miles a year at 25.6 mpg, based on the EPA’s real-world fuel economy figure for new gas-powered vehicles.  

Way then compared those costs with each state’s median household income, using figures from the U.S. Census Bureau’s 2024 American Community Survey, as compiled by KFF.  

Keep in mind that this comparison only covers insurance and fuel. It doesn’t include depreciation, loan interest, repairs, registration, or sales tax. It also assumes everyone drives the same number of miles each year. So, the actual cost of owning a car is likely higher in every state.  

Car costs take a big bite out of household budgets 

The Bureau of Labor Statistics says the average American household spent $13,318 on transportation in 2024. That’s about 17% of its total spending, more than the $10,169 spent on food.  

In a LendingTree survey, 42% of people who own or lease a car said vehicle expenses stress them out often. 39% of respondents said owning a car was a luxury they couldn’t afford, while 46% of car owners had at least considered living without one.  

Unexpected repair bills are especially difficult to manage. When asked how they’d pay for a surprise $1,000 repair, 28% said they’d use their savings. Another 17% said they’d put it on a credit card and carry a balance, while 13% said they’d delay the repair because they couldn’t afford it immediately. 

Conclusion  

Add up just a few of the yearly costs covered in this article, and the total is already steep. Depreciation ($7,200), insurance ($2,237), and parking, tolls, and car washes (about $830) come to roughly $10,000 a year, and that’s before fuel, repairs, and loan interest.  

Navy Federal estimates that the cost of car ownership surged by 40.59% between January 2020 and August 2025. 

With costs this high, it isn’t surprising that 62% of buyers in Cox Automotive’s 2025 Car Buyer Journey Study agreed that owning or leasing a vehicle is becoming too expensive.