A vehicle is a necessity for most Americans. Unless you live in an area that has a strong public transportation system, your vehicle likely helps you navigate your daily life. But in a time of decades-high inflation, do you know how much your car is really costing you? Bankrate delves into the true cost of car ownership to help you understand how your ride affects your bottom line.


Compare rates and save on auto insurance today!

ZIP code
Close X
Advertising Disclosure
This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions.

Compare auto insurance rates

Answer a few questions to see personalized rates from top carriers.
Caret DownCaret Up
Please select age
Badge No spam. No fees. No surprises.

Save on auto insurance with quotes from trusted providers like:


Drivers switch & save an average of $750+/year

Liberty Mutual

Are you overpaying for auto insurance?


Safe drivers choose Allstate®

Powered by Coverage.com (NPN: 19966249)
Insurance Disclosure

Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

See more providers in
Choose from insurers in

How much does it cost to own a car?

The cost of buying a new or used car has increased substantially in recent years due to inflation and supply chain issues. As of March 2023, the average cost of a used car was $26,213, according to Kelley Blue Book. For a new car, the average cost was $48,008.

Although vehicle prices are slightly lower than they were at the end of 2022, many drivers are still stretching their budgets to get around. Additionally, the sticker price is just the first in a long line of related expenses when purchasing a car.

Owning a car also requires paying for insurance, gas, maintenance and more. The annual cost of car ownership in 2022 was $10,728, up from 2021’s yearly cost of $9,666, according to AAA’s Your Driving Costs study. This increase is in line with the most recent Consumer Price Index report from the Bureau of Labor Statistics, which shows an increase of 8.2 percent in all transportation costs (except gas) between June 2022 and June 2023.

Learn more: How to buy a new car in a high-cost environment

Costs associated with car ownership

Some car ownership costs are more apparent than others, but there may be ways to minimize these costs. If you’re buying your first car or just want a refresher on what car ownership entails, here are some things you might consider.

  • The average cost of full coverage car insurance in 2023 is $2,014 per year, although your premium may vary based on where you live, the type of vehicle you drive, your driving history, the insurance company you choose and the types and levels of coverage you purchase. Comparing quotes from different carriers and choosing the appropriate amount of coverage for your needs may help you avoid unnecessary expenses. Speaking with an insurance expert may help you maximize your car insurance coverage value.
  • Monthly loan payments for new cars jumped to an average of $725 in the first quarter of 2023, while used vehicle loans averaged $516 per month, according to Experian. Unsurprisingly, these amounts have increased to keep pace with inflation. Buying a used vehicle in good condition might reduce your auto loan payment and future maintenance costs.
  • The national average cost of gasoline sits at $3.57 per gallon as of July 19, 2023, according to AAA. Some states are still dealing with far higher prices, though. California drivers pay the most, with a current average of $4.89 per gallon. Make sure to think about your commute and average weekly mileage when you factor in gas prices; the more you drive, the more you’ll pay at the pump.
  • Registration fees vary from state to state. While some states charge a flat fee for all vehicles, others base the registration cost on the age, horsepower or weight of a vehicle. In states like Oregon, car owners might pay as much as $316 in registration fees. Meanwhile, Alabama residents could pay as little as $23. You can find out how much registering a vehicle in your state will cost by contacting your state’s department of motor vehicles.
  • The average price of routine maintenance for a medium sedan was 10.64 cents per mile in 2022, according to AAA. Your own costs may vary based on your vehicle type, repair costs in your area and how much you drive. Tracking maintenance expenses like oil changes, tire rotations and windshield wiper replacements may help you better budget for these costs.
  • Depreciation isn’t actually a “cost,” but it is something to keep in mind, as your car’s value will decrease as soon as you drive it off the lot. A car’s depreciation varies widely based on its make and model, age, location, mileage and how well it’s taken care of. In 2022, the average annual cost of depreciation for a medium sedan driven 10,000 miles per year was $3,656, according to AAA. Typically, brand-new vehicles lose their value quickly, so buying used and keeping the car in good shape may help lower your car’s depreciation rate.

How to save on car ownership

Although the cost of car ownership can be steep, owners may be able to take steps to keep expenses in check:

  • Shop for cheaper car insurance: Insurance companies have different algorithms for calculating insurance rates, so some may offer you cheaper rates than others based on your personal rating factors and coverage needs. Comparing quotes from multiple providers may help you save on your premium.
  • Choose your vehicle wisely: The make and model of the vehicle you buy may help you save right off the bat with a lower price tag and down the road with lower insurance, repair and gas costs. You may want to consider your lifestyle, local gas prices, customer reviews, average maintenance costs and average insurance costs when considering a new vehicle.
  • Refinance your car loan: Some car loans can be refinanced at a lower rate. It may be wise to check and see if there’s a lower rate available, especially if the market has changed since the vehicle was purchased.
  • Consolidate driving trips: The more you drive your car, the more maintenance it will generally require and the more you will spend on gas. It may be a good idea to consolidate errands into one trip, carpool with friends and neighbors and research public transportation options. Driving less might also mean lower car insurance costs, especially if you participate in a telematics program.
  • Maintain your car: When it comes to vehicle repair costs, the best defense is a good offense. Having routine maintenance done may help prevent higher repair costs down the road. Early detection of issues can often bring repair costs down.

When is it time to replace a car?

Vehicles don’t last forever, which means at some point you will need to replace yours. Over time, maintenance can become unmanageable or the car might no longer be a good fit for your lifestyle. Here are a few situations to consider when thinking about whether or not it’s time to replace a car.

Family or lifestyle changes

Families may grow with time, and your ideal vehicle may change as your family changes. For example, a larger vehicle may be needed to accommodate car seats. While larger cars have more room and the newer models include advanced safety features, they may not get as good of gas mileage as a small car, and could mean greater financial responsibility.

Job or lifestyle changes may also necessitate a car replacement. Getting a new job with a longer commute could mean it’s time to invest in a more reliable vehicle with better gas mileage. If you own a small car but fall in love with camping, then you may need to buy an SUV or truck to accommodate your new lifestyle preferences.

Chronic maintenance issues

Once a car has been used for many years, it may require more frequent maintenance. If a vehicle is constantly being taken to the repair shop, it might be time for a new ride. You can even do a bit of math to see if the cost to maintain your current vehicle is outweighing the cost to get a different one.

Although newer car models are typically less likely to break down, they do come with a substantial upfront cost or car payment. Additionally, with advanced safety features and computer systems, average maintenance costs may be more expensive than with an older model.

Poor fuel efficiency

Alternative energy and new technology have dramatically increased the fuel efficiency of modern cars. Those looking for a car that won’t use a lot of gas (or any at all) can find plenty of hybrid and electric vehicles on the market, and they’re becoming more affordable every year.

Although fuel-efficient cars may cost more to buy and maintain, fuel costs could go down or be completely eliminated. Plus, fuel-efficient vehicles may reduce your personal carbon footprint and potentially earn you a discount on your car insurance with some carriers.

Budget changes

If your budget has recently changed, your vehicle might not fit your new needs. For example, perhaps you’ve taken a lower-paying job and are struggling to afford your car payment. Or maybe it’s the opposite: you’re making more money and you can finally afford your dream car.

You could get greater financial peace of mind when you align your vehicle’s costs with your budget. However, offloading an older car with depreciated value may not get you the full amount to pay off your loan, which could mean your budget has to adjust to meet your new payment needs. On the other hand, if your budget has increased, selling an older vehicle could eliminate some maintenance costs while providing you with a more comfortable and efficient ride.

Drivers should note that states typically charge more to register a newer vehicle, and may also charge extra for all-electric models. Additionally, insurers typically charge a higher monthly premium to insure newer or luxury vehicles, as the cost to repair or replace this vehicle in the case of a covered event will likely be higher.

Pros and cons of replacing your vehicle

There are certainly pros and cons to replacing a vehicle, and they may vary by driver. While getting a new car may be exciting, it may also come with additional expenses. Reviewing this list and comparing the pros and cons of a new car in your own life may help you decide if it’s time to purchase a new vehicle.

Pros Cons
New cars are typically more fuel efficient. Buying a new car will likely increase your out-of-pocket costs, even if it reduces maintenance costs.
A hybrid or electric model could reduce or eliminate fuel costs. It may cost more to register and insure a newer vehicle.
A different vehicle could better meet your family’s lifestyle and transportation needs. When maintenance is needed, advanced systems could make repairs more costly.
Newer vehicles usually require less maintenance and fewer repairs. Fuel-efficient cars can have higher upfront costs.
Budget changes could help you buy a more comfortable or efficient vehicle. You could incur hefty out-of-pocket costs for the down payment and extended warranty.

Frequently asked questions

  • The cars that have the lowest cost of ownership typically get good gas mileage, have low maintenance costs and are proven to be reliable, based on customer and industry reviews. By doing some research, you should be able to find a car with a low cost of ownership to meet your budgetary needs. Or you can start by considering low-cost models like the Nissan Versa, Mitsubishi Mirage or Kia, as suggested by AAA.
  • To get the best rate on a policy, most insurance experts recommend shopping around to compare rates from various providers. It may be a good idea to research all the car insurance discounts and bundles offered by various insurance companies. Many providers give discounts for things as simple as setting up auto-pay on your policy. Typically, bundling multiple insurance policies, such as auto and home, with one carrier nets you the biggest savings opportunity. Maintaining a clean driving record may also help you save on your car insurance rate as your driving record factors into your rates and indicates how risky of a driver you may be.
  • To calculate the total cost of car ownership, you may want to consider the cost of the vehicle and interest on monthly payments. Also, keep the insurance premiums, fuel costs, registration fees and maintenance expenses in mind, as well as depreciation. Estimating these costs based on your lifestyle, vehicle type and local cost of living may help you estimate a monthly or yearly figure for your total cost of car ownership.
  • There are a few reasons why used and new vehicles are so expensive right now. Although average rates are not as high as at the end of 2022, inflation and supply chain issues are still driving up vehicle prices. A shortage of workers in manufacturing, as well as a shortage of computer chips used in many modern vehicles, are increasing the average costs of cars. As fewer vehicles are produced but demand remains constant, prices rise in response. Lastly, as the Federal Reserve continues to raise interest rates as a response to inflation and other economic factors, shoppers may also see higher interest rates on their car payments when they do buy a vehicle, increasing their total cost of purchase.