Figuring out the specific costs of owning a car can help you budget accordingly. Many factors contribute to the total cost of ownership, such as fuel, insurance premiums, taxes and depreciation.
Here’s how to calculate your car’s costs, as well as seven ways to reduce your monthly auto expenses.
How to calculate the total cost of car ownership
A car ownership calculator can help you find the most accurate estimate based on your car’s make, model and the following car-related expenses:
Registration, fees and taxes
While some states have no vehicle sales tax, others have high sales taxes on top of annual property taxes. When you first buy a vehicle, expect to spend about 8% to 10% of the vehicle’s price in taxes and fees, including those charged by the dealership.
Watch out for common dealership fees when shopping for new or used vehicles. Some are unavoidable, like a destination charge for a new vehicle or car title transfer fees for used vehicles. Others are optional add-ons, like extended warranties and anti-theft devices.
Insurance
The national average car insurance cost is about $53 a month, or $693 a year. However, the exact amount that you’ll pay will vary based on your vehicle type, driving history, home state and the level of coverage you select. Get a few car insurance quotes to find the best deal for your situation.
Fuel
There’s no denying that gas contributes to a large portion of your overall car expenses, with national fuel prices averaging $3.28 per gallon as of Nov. 22, 2023. The U.S. Department of Transportation’s Federal Highway Administration (FHWA) estimates that Americans put 13,476 average miles on a car per year.
While the exact amount spent depends on how much you drive and fuel costs in your area, you could expect fuel expenses between $150 to $200 per month, or an average of $5,000 per year.
Maintenance and repairs
It’s hard to nail down exact maintenance costs since they vary by vehicle type, local mechanic fees and the general wear and tear you put on the car. AAA data shows that maintenance for a medium sedan in 2022 averaged about 10.64 cents per mile.
So, if you drive 15,000 miles in one year, you could expect to budget around $1,600 for maintenance expenses. These costs will likely increase as the car ages and the warranty covers less.
It costs money to get around. When hopping on transit, renting a scooter, or hailing a ride, you generally know the cost of the trip upfront, before you start your journey. It is a bit trickier, however, to calculate the true cost of driving your own car. Let’s take a closer look at these costs…
There are the obvious costs like your monthly car payment, gas, and parking at your origin and/or destination. Add to that the somewhat less obvious “pay and forget” costs that come up regularly or semi-regularly, like registration, fees, taxes, and insurance, as well as maintenance and repairs.
Then there are those costs that are harder to quantify, like the time spent looking for parking if you don’t have a designated space, or the inconvenience of having to park far from your destination. Traffic is never a fun way to pass the time, but at least in other modes like transit or ridesharing, you can read, nap, or just relax.
And finally, there’s the depreciation of the car. While not a direct cost, depreciation is ultimately a loss that accumulates over the car’s lifetime.
Having a car always at your disposal can be convenient but, for something that sits idle (parked) on average 95% of the time, 1 it may be at a high “cost per trip” price. By choosing an alternative to car ownership, you may both save money and reduce your environmental impact.