How Much Does a Car Cost? Breaking Down the Average Cost of Car Ownership
Most car shoppers spend weeks researching make, model, and trim level only to get blindsided by everything that comes after the purchase.
The sticker price is just the starting point. When you factor in fuel, insurance, maintenance, depreciation, and fees, the average cost of a car adds up to far more than most people expect.
According to AAA's 2025 Your Driving Costs study, the total cost of owning a car runs approximately $11,577 per year (or about $965 a month) for a new vehicle. Understanding what drives that number is the first step toward budgeting for it.
In this article, we’ll offer a full breakdown of what car ownership actually costs, from the average cost of a car at purchase to the ongoing expenses that keep stacking up year after year.
What Is the Average Price for a Car?
Before the ongoing costs kick in, there's the purchase itself. And right now, buying a car is more expensive than it's ever been.
New vs. Used: A Significant Price Gap
According to Kelley Blue Book, the average transaction price for a new vehicle hit an all-time high of $50,326 in December 2025. For shoppers who can't stretch that far, the average cost of a car from the used market offers relief, but not as much as it once did.
Edmunds data shows the average transaction price for all used vehicles currently sits around $25,373. New cars run roughly 29% more expensive than pre-pandemic levels.
Whether you're buying new or used, knowing the average cost of a car across different segments helps set realistic expectations. Knowing basic car parts and what's under the hood can also help you evaluate whether a vehicle's price reflects its true value.
Average Car Prices by Vehicle Type
- Budget/Compact Cars: $23,000–$30,000 (e.g., Honda Civic, Toyota Corolla)
- Compact SUVs: $25,000–$35,000 (e.g., Kia Seltos, Subaru Crosstrek)
- Midsize Sedans & Family SUVs: $35,000–$50,000
- Luxury Vehicles & Large Trucks: $60,000 and up
Deciding between a new or used car is one of the biggest financial decisions you'll make as a buyer. Timing matters, too. Shopping during certain times of year can save you thousands off the sticker price.
What Is the Total Cost of Owning a Car?
The monthly car payment gets most of the attention, but it's only one piece of the puzzle. Ongoing expenses that most buyers don't fully account for upfront make up the bulk of the actual cost of car ownership.
AAA puts the average annual cost of owning a car at $11,577 for a new vehicle driven 15,000 miles a year. That means the average cost of owning a car per month works out to roughly $965. Here's how that breaks down:
| Cost category | Annual average |
|---|---|
| Depreciation | $4,334 |
| Fuel | $1,950 |
| Insurance | $1,694 |
| Maintenance & repairs | ~$1,650 |
| Registration & fees | $813 |
| Finance charges | $1,131 |
| Total | ~$11,577 |
Breaking Down the Cost of Car Ownership
1. Depreciation
Depreciation is the single largest line item in the cost of owning a car. According to AAA, the average new vehicle loses roughly $4,334 in value per year, shedding 15-20% in the first year alone and about 60% of its original value within five years.
2. Fuel Costs
Fuel is one of the most variable expenses in the calculation of average cost of car ownership. AAA estimates the average driver pays about 13 cents per mile, which adds up to roughly $1,950 annually for 15,000 miles a year.
Your actual costs will depend on your vehicle type, local prices, and how much highway vs. city driving you do. Electric and hybrid vehicles can reduce fuel costs significantly, though they often carry higher sticker prices.
3. Insurance
Almost every state requires auto insurance, and full-coverage policies average around $1,694 per year, according to AAA. Your premium will vary based on your vehicle type, driving record, location, age, and coverage level.
Shopping your policy annually is one of the most straightforward ways to keep this cost in check.
4. Maintenance & Repairs
Routine maintenance is predictable. The average monthly car maintenance cost works out to about 11 cents per mile, or roughly $1,650 per year. This covers oil changes, tire rotations, brake inspections, and standard upkeep.
What's harder to plan for is the unexpected repair. A transmission failure, a blown head gasket, or a failed AC compressor doesn't announce itself in advance.
Following a regular car maintenance checklist can help you catch problems early and keep the cost of owning a car down. Just keep in mind that when repairs do happen, they can be costly and regularly run into the thousands.
5. Registration, Fees & Finance Charges
These are the quieter expenses that still add up:
- Registration & licensing: Averages around $813 per year nationally, though this varies significantly by state and vehicle type
- Finance charges: If you're carrying an auto loan, expect to pay an average of $1,131 per year in interest, based on a standard 60-month loan at national average rates
Together, these two categories add nearly $2,000 annually to the average cost of a car.
How to Keep the Cost of Owning a Car Under Control
The average cost of a car is only part of the equation. What you spend over the years depends on the choices you make as an owner.
Several of these expenses are within your control, and a few smart decisions upfront can meaningfully reduce what you spend over the life of your vehicle.
- 1. Buy used instead of new. A lightly used vehicle sidesteps the steepest part of the depreciation curve. A well-maintained three or four-year-old car can offer most of the reliability of a new one for tens of thousands less.
- 2. Stay ahead of maintenance. A small problem ignored over time becomes a large repair. Following a consistent schedule is one of the most effective long-term strategies for reducing the cost of car ownership.
- 3. Shop your insurance every year.Comparing quotes at each renewal can surface meaningful savings without sacrificing coverage.
- 4. Match the vehicle to your life.Fuel economy, reliability ratings, and typical repair costs all factor into what you'll spend long-term. A vehicle that fits your actual driving habits will cost less to own over time.
Protecting Yourself From the Costs You Can't Predict
Budgeting for fuel, insurance, and routine maintenance is manageable. The harder part is planning for the breakdown you didn't see coming.
Knowing the average cost of a car is just the entry point. What you spend over years of ownership depends heavily on what happens under the hood.
That's where a CarShield vehicle service contract can make a real difference. When a covered component fails, CarShield helps cover the repair cost so one unexpected breakdown doesn't undo months of careful budgeting.
Explore our protection plans to find the right level of coverage for your vehicle. You can also learn more about how we work and what to expect from a vehicle service contract.
Frequently Asked Questions
How much does a car cost on average?
The average transaction price for a new vehicle hit $50,326 in December 2025, according to Kelley Blue Book. Used vehicles average around $25,373, according to Edmunds. Prices vary widely based on vehicle type, trim level, and market conditions.
What does it cost to own a car each month?
When factoring in depreciation, fuel, insurance, maintenance, registration, and finance charges, AAA put the figure at approximately $965 per month for a new vehicle driven 15,000 miles annually.
What is the biggest cost of car ownership?
Depreciation (the loss of your vehicle's value over time) is the single largest expense for most car owners. It's often overlooked because it doesn't show up as a direct bill, but it significantly affects your total ownership costs over time.
