Average Cost of Owning a Car (2024)

FAQs

Average Cost of Owning a Car? ›

When you take into account loan interest, depreciation, fuel, insurance, maintenance and fees, the cost of owning a car makes a big leap. For new vehicles driven 15,000 miles a year, average car ownership costs were $12,182 a year, or $1,015 a month, in 2023, according to AAA.

Owning a car costs an average of $10,728 per year or $894 per month. The cost of owning and maintaining increased by 10% from 2021 and crossed the 10K mark in 2022. The costs of owning a car go beyond the purchase price.

According to Kelley Blue Book, the average cost of a used car in October 2023 was $26,533, while a new car could be bought for the average price of $48,334.

The total cost of owning and operating an automobile include fuel, Maintenance, Tires, insurance, license, registration and taxes, depreciation, and finance.

According to our research, you shouldn't spend more than 10% to 15% of your net monthly income on car payments. Your total vehicle costs, including loan payments and insurance, should total no more than 20%. You can use a car loan calculator to calculate a monthly payment within your budget.

Using proprietary formulas, we calculate the 5-year costs for the seven cost categories that make up the TCO® (car depreciation, insurance, financing, taxes & fees, fuel, maintenance and repairs).

Is It Cheaper Not to Own a Car? Yes, it is cheaper not to own a car. You will save money on the cost of a car, interest if there would have been a loan involved, gas, insurance, and maintenance.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

Is $10,000 enough for a decent car? ›

Buying a used car for less than $10,000 can get you behind the wheel of a reliable and good-looking ride without costing you a fortune. However, you must prepare for potential repairs that can empty your wallet even though you might not break the bank with upfront costs.

How much should you spend on a car? Whether you're taking out an auto loan or a personal loan to pay for your car, it's a good idea to limit your car payments to between 10% and 15% of your take-home pay. If you take home $4,000 per month, you'd want your car payment to be no more than $400 to $600.

Starting with the 1/10th guideline, created and pushed by Financial Samurai, this guideline states: buy a car in cash that costs less than 1/10th your gross annual pay. If you make $50,000 you should buy a car in cash worth $5000. If you make $100,000, the car you buy should be worth no more than $10,000.

National Car Ownership Statistics at a Glance

91.7% of households had at least one vehicle in 2022. Only 8.3% of households did not have a vehicle.

A car is beneficial to your quality of life, but it typically won't provide a good return on your investment. In just the first year of ownership, a vehicle can lose up to 20% of its value. This rapid depreciation makes buying a vehicle a bad investment option.

Stick to this income rule.

The total value of all your vehicles shouldn't be more than half your annual income. Why? Well, you don't want too much of your wealth tied up in things that depreciate (or go down in value). And things with motors depreciate big time.