Car Ownership Costs Guide
True cost of owning a car including depreciation, insurance, fuel, maintenance, and financing by vehicle type
Key Numbers
Avg Annual Cost
$11,577
Depreciation Share
37%
Small Sedan
55.87¢/mile
Half-Ton Pickup
98.54¢/mile
According to AAA's 2025 Your Driving Costs study, the average new car costs $11,577 per year to own and operate — $965/month — based on 15,000 miles/year over a 5-year ownership period. That figure is down $719 from 2024, driven by lower depreciation, fuel prices, and finance charges.
Annual Cost Breakdown (2025 Average)
| Category | Annual Cost | Per Mile | Share |
|---|---|---|---|
| Depreciation | $4,334 | 28.9¢ | 37% |
| Fuel | $1,950 | 13.0¢ | 17% |
| Insurance | $1,694 | 11.3¢ | 15% |
| Maintenance, Repairs & Tires | $1,656 | 11.0¢ | 14% |
| Financing | $1,131 | 7.5¢ | 10% |
| License, Registration & Taxes | $813 | 5.4¢ | 7% |
| Total | $11,577 | 77.2¢ | 100% |
Based on 15,000 miles/year, 5-year ownership, regular gas at $3.15/gal average. Financing assumes 5-year loan with 15% down at national average rate.
The 15–20% guideline: Many financial planners suggest keeping total vehicle costs (payment, insurance, fuel, and maintenance) under 15–20% of take-home pay. At $5,000/month net income, that's $750–$1,000/month for all car expenses.
Costs by Vehicle Type
Vehicle type is the single largest factor in ownership costs. A half-ton pickup costs 76% more per mile than a small sedan — an extra $6,400/year.
| Vehicle Type | Cost/Mile | Annual Cost | 5-Year Cost |
|---|---|---|---|
| Small Sedan | 55.87¢ | $8,380 | $41,900 |
| Hybrid | 63.94¢ | $9,591 | $47,955 |
| Subcompact SUV | 66.11¢ | $9,917 | $49,585 |
| Medium Sedan | 66.37¢ | $9,956 | $49,780 |
| Compact SUV (FWD) | 68.53¢ | $10,279 | $51,395 |
| Electric Vehicle | 71.21¢ | $10,682 | $53,410 |
| Midsize Pickup | 79.11¢ | $11,867 | $59,335 |
| Medium SUV (4WD) | 83.89¢ | $12,584 | $62,920 |
| Half-Ton Pickup | 98.54¢ | $14,781 | $73,905 |
AAA 2025. All figures at 15,000 miles/year. 5-year cost = annual cost × 5. Hybrid and EV categories are cross-category averages and not directly comparable to single-category rows.
EV, Hybrid & Gas Compared
AAA's 2025 study compares electric, hybrid, and gas powertrains within four popular vehicle categories. EVs have lower fuel and maintenance costs but higher depreciation and insurance, often resulting in higher total cost of ownership.
Annual Cost by Powertrain (15K mi/yr)
| Category | Gas | Hybrid | Electric | EV Premium |
|---|---|---|---|---|
| Medium Sedan | $9,956 | $9,479 | $13,692 | +$3,736 |
| Compact SUV | $10,279 | $10,340 | $11,191 | +$912 |
| Medium SUV | $12,584 | $12,855 | $12,710 | +$126 |
| Pickup | $14,781 | $14,636 | $16,758 | +$1,977 |
Where EVs Save — and Where They Don't
| Cost Category | Gas | Hybrid | Electric |
|---|---|---|---|
| Fuel / Energy | Highest | Middle | Lowest |
| Maintenance | Highest | Lowest | Low |
| Depreciation | Moderate | Lowest | Highest |
| Insurance | Lowest | Middle | Highest |
EV incentives: Federal EV tax credits (when available) can offset the higher purchase price. State incentives vary — check the EV Tax Credit Eligibility reference for current status.
Reducing Ownership Costs
Choosing a small sedan over a half-ton pickup saves $6,400/year. Beyond vehicle selection, these strategies can reduce ongoing costs by $1,000–$2,000 annually.
| Strategy | Potential Savings | Details |
|---|---|---|
| Buy 2–3 years used | $1,500–$3,000/yr | Avoids steepest depreciation; often still under warranty |
| Shop insurance annually | $300–$500/yr | Compare 3–5 quotes; rates change frequently |
| Raise deductible to $1,000 | $100–$300/yr | From $500 to $1,000; keep difference in savings |
| Use independent mechanics | $200–$400/yr | Dealers charge 20–50% more for the same work |
| Maintain tire pressure | $100–$200/yr | Improves MPG by ~3% and extends tire life |
| Drive efficiently | $150–$300/yr | Avoid hard acceleration/braking; use cruise control |
| Choose reliable brands | $200–$500/yr | Toyota, Lexus, Honda rank highest for long-term reliability |
Costs Vary by State
Insurance rates, sales tax, gas prices, and registration fees differ dramatically across states, creating a spread of over $13,000 in 5-year ownership costs.
Cheapest States (5-Year Hidden Costs)
New Hampshire ($16,812), Oregon, Vermont, Maine, and Ohio benefit from no/low sales tax and low insurance premiums.
Most Expensive States (5-Year Hidden Costs)
Louisiana ($30,293), Florida, Nevada, California, and Michigan face high insurance rates, sales tax, and repair costs.
State cost data from Insurance.com (2025). Hidden costs include insurance, gas, maintenance, and state taxes/fees — excludes loan payments and depreciation.
This content is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Consult a qualified professional for guidance tailored to your situation.