In a Nutshell
The cost of owning a car is more than just the sticker price on the window. You’ll also need to spend money to use that car. And costs like fuel, parking, maintenance and insurance can quickly add up.Understanding all the costs associated with owning a car can help you figure out what you can really afford.
In addition to your monthly car payment, you’ll likely be shelling out for ongoing costs like gas, car insurance and regular maintenance.
Your monthly loan payment
While some people may pay cash for their vehicle, many opt to finance the cost by taking out an auto loan.
The larger your down payment, the less money you’ll need to borrow. Making a down payment can also reduce your monthly payment and the total amount of interest you’ll pay on the loan.
| Vehicle cost (with taxes and fees) | $37,300 |
| Your down payment | $5,000 |
| Total car loan amount | $32,300 |
The longer you stretch out your loan period, the lower your monthly payment will be. But with a longer loan term, you’ll pay more in total interest.
| Total car loan amount | $32,300 |
| Interest rate | 7.5% |
| Loan term | 5 years |
| Total monthly payment | $648 |
| Total paid on loan | $38,880 |
Additional costs of owning a car
Car insurance
Car insurance is required in most states. A variety of factors, including your driving history and age, can influence the cost of your car insurance. The combined average car insurance premium in the U.S. was $1,189 annually, or just over $99 per month, in 2018, according to the National Association of Insurance Commissioners’ Auto Insurance Database Report released in 2021.
| Total monthly car loan payment | $648 |
| Average monthly car insurance premium | $99 |
| Total monthly cost of owning a car | $747 per month |
Fuel
The Bureau of Labor Statistics found that consumers in 2017 spent an average of $1,968 per year, or $164 per month, on gas, other fuels and motor oil.
| Monthly car loan payment and car insurance premium | $747 |
| Average monthly fuel cost | $164 |
| Total monthly cost of owning a car | $911 per month |
Maintenance
In 2017, AAA found that, on average, new vehicles cost $1,186 each year to maintain and repair.
| Monthly car loan payment, car insurance premium, fuel | $911 |
| Average monthly maintenance cost | $99 |
| Total monthly cost of owning a car | $1,010 |
Other potential costs
Additional costs to consider can include …
- Vehicle registration fees — These fees may be annual or biennial. Some states charge a flat registration fee, while others use factors like your car’s age or fuel efficiency to determine your fee.
- Vehicle property tax — Some states also charge a vehicle property tax, based on your car’s value.
- Parking — Depending on where you work and live, you might need to factor parking costs into your budget. Parking costs vary by city.
Bottom line
The advertised price of a vehicle is just one consideration when calculating the total cost of owning a car. Expenses like car insurance, gas and maintenance can drive up your monthly costs. Before you buy, do a little research to get a sense of potential costs and to help make sure you can stick to your car budget.