Quick Reference

Car Ownership Costs Guide

True cost of owning a car including depreciation, insurance, fuel, maintenance, and financing by vehicle type

Last Updated: Feb 2026

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 — $965 per month — to own and operate, 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.

2026 outlook: While nominal costs fell in 2025, three trends are pushing them back up. Auto insurance remains elevated — premiums rose 12% year-over-year through 2025 and are projected to climb a further 7–9% in 2026. Tariffs on imported vehicles and parts (25%+ on many components) are expected to flow through to repair costs by mid-2026. And auto loan rates remain high, averaging 7.1% APR on new vehicles as of Q4 2025, versus 3.9% in 2021.

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.

The 20/4/10 rule: A stricter benchmark used by many advisors — put at least 20% down, finance for no more than 4 years, and keep total vehicle expenses (payment + insurance + fuel) under 10% of gross monthly income. At $75,000/year gross ($6,250/month), that caps total car costs at $625/month. This rule works best for households earning $100,000+; median earners often need to buy used or choose a smaller vehicle to meet it.

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 $17,500 in 5-year ownership costs.

Cheapest States (5-Year Cost)

New Hampshire ($21,917), Oregon, Vermont, Maine, and Ohio benefit from no/low sales tax and low insurance premiums.

Most Expensive States (5-Year Cost)

Louisiana ($39,417), Florida, Nevada, California, and Michigan face high insurance rates, sales tax, and repair costs.

State cost data from Insurance.com (2026). Costs include insurance, gas, maintenance, sales tax, and registration fees over 5 years — excludes loan payments and depreciation.

Frequently Asked Questions

How much does it cost to own a car per year?

The average new car costs $11,577 per year to own and operate, according to AAA's 2025 Your Driving Costs study. That assumes 15,000 miles/year over a 5-year ownership period and covers depreciation, fuel, insurance, maintenance, financing, and registration. Costs vary significantly by vehicle type — from $8,380/year for a small sedan to $14,781/year for a half-ton pickup.

How much does a car cost per month, all in?

The true all-in cost averages $965/month for a new vehicle. That breaks down roughly as: depreciation ($361/mo), fuel ($163/mo), insurance ($141/mo), maintenance/repairs/tires ($138/mo), financing ($94/mo), and registration/taxes ($68/mo). Most drivers only think about their loan payment — the average new car payment was $767/month in Q4 2025 — but the full cost of ownership is $200/month more than that.

What percentage of my income should go toward a car?

Most financial planners recommend keeping total vehicle costs (payment + insurance + fuel + maintenance) under 15–20% of take-home pay. A stricter rule, the 20/4/10 rule, caps total car expenses at 10% of gross income, requires at least 20% down, and limits the loan term to 4 years. At a $75,000 gross salary ($6,250/month), that caps monthly car expenses at $625. Median-income earners typically need to buy used or choose a smaller vehicle to meet either rule.

What is the cheapest vehicle type to own?

Small sedans are the cheapest vehicle category to own at 55.87¢/mile ($8,380/year). They benefit from lower purchase prices, better fuel economy, lower insurance premiums, and cheaper parts. Hybrids are the second cheapest overall at 63.94¢/mile. The most expensive category is half-ton pickups at 98.54¢/mile ($14,781/year) — 76% more expensive per mile than a small sedan.

Is an electric car cheaper to own than a gas car?

Not yet for most buyers, based on 2025 data. EVs cost an average of $10,682/year versus $9,956 for a comparable gas sedan — a $726/year premium — primarily because of higher depreciation and insurance costs, which outweigh the savings on fuel and maintenance. The gap narrows significantly for high-mileage drivers and those who qualify for federal tax credits (up to $7,500 for eligible models). Compact SUV EVs are nearly cost-equivalent to gas models at this mileage level.

What are the hidden costs of car ownership?

Depreciation is the biggest hidden cost — averaging $4,334/year (37% of total) — because it never shows up as a bill. A new car loses roughly 20% of its value in the first year alone. Other overlooked costs include financing interest (easy to underestimate over a 5-year loan), insurance increases after claims or moving states, registration fees that vary by state, and maintenance that compounds as vehicles age. Together, these non-payment costs average $5,000–$7,000/year beyond the loan payment.

How much more does a truck cost to own than a sedan?

A half-ton pickup costs about $6,400 more per year than a small sedan — roughly $533/month extra, similar in size to a second car payment. Over 5 years, that's approximately $32,000 in additional ownership costs. The gap is driven by higher depreciation, lower fuel economy, and more expensive insurance and maintenance on trucks.

Sources

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.