The average cost of owning a car
Owning your first car feels like a rite of passage, a first step into adulthood — like getting your first apartment or finally figuring out how taxes work. But with average new car prices just below $50,000 and car insurance rates at an all-time high, your dream ride might feel more like a money pit on wheels — and you’re not alone. The average cost of owning a car is wreaking havoc on household budgets nationwide.
How much does it cost to own a car?
To answer the question of how much a car costs overall, a good place to start is with the actual purchase price of the car. According to Cox Automotive and Kelley Blue Book, the average transaction price of a new car in January 2025 was $48,641, and used car transactions averaged to $25,721. While used car prices decreased by about 5 percent from the same time last year, the used car market remains thin due to the reduction in vehicle manufacturing during the pandemic. But the sticker price is only the beginning — there are other costs involved in owning a vehicle.
Bankrate’s Hidden Cost of Car Ownership Study, published in August 2024, shows that Americans spend an average of $6,684 per year in hidden vehicle expenses in addition to their lease or loan payments. This study examined the annual cost of car insurance, gas, taxes, and maintenance and repair costs. Since then, everything has gotten more expensive. As of February 2025, the average cost of full coverage car insurance increased to $2,670, putting the updated hidden expenses figure to be $7,025. When we add in the average monthly payment for new and used cars, Americans spend about $15,869 per year on costs associated with a new car and $13,265 for a used vehicle.
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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.
Costs associated with car ownership
As noted above, the costs associated with purchasing and maintaining a car include far more than just fuel costs. All of the following factors play a role in determining what your total cost will be.
Insurance
The average cost of car insurance as of February 2025 is $2,670 per year for full coverage and $773 per year for minimum coverage. However, 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 the value of your car insurance coverage.
Learn more: How much car insurance do I need?
Purchase price and financing
Based on data from Experian, the average monthly loan payment for a new car is $737, while drivers paying on a used vehicle pay an average of $520 monthly. Based on these numbers, if you’re on a limited budget, you may be better off purchasing a good-quality used car to keep loan costs in check.
Gas
The national average cost of gasoline sits at $3.16 per gallon as of February 18, 2025, according to AAA. However, this rate changes daily and fluctuates drastically between winter and summer months. Your annual gas cost depends on vehicle selection and other factors, such as the per gallon cost of gas in your town.
Our August 2024 report determined that annual mileage can outweigh the average per gallon price of gas in your state, causing you to pay more at the pump. For example, drivers in Hawaii average 10,980 miles per year and pay $1,978 annually for gas expenses. In comparison, drivers in Indiana pay an average of $2,913 per year for gas despite the lower $3.68 per gallon price due to their higher mileage — an average of 20,560 per year.
Car repair and maintenance
According to the 2024 Your Driving Cost (YDC) report from AAA, the average price of routine maintenance is 10.89 cents per mile if you drive a 2024 medium sedan, with an average 15,000 miles driven annually. Considering these numbers, the average annual cost of car maintenance is approximately $1,634. 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.
Taxes
Auto tax rates vary from state to state and even between municipalities. Some states, like Alaska and Delaware, do not have a typical tax for vehicle purchases — Alaska has a motor vehicle registration tax (MVRT) and Delaware has a gross receipt tax for the seller of goods. While your tax rate may be different depending on where you live and your vehicle, the national average annual car tax is $1,182.
Other vehicle expenses to consider
There are other factors that impact vehicle ownership expenses. While registration and depreciation may not feel like major aspects of vehicle ownership, these costs can add up.
Registration
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.
Depreciation
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. AAA’s YDC study reveals the average annual cost of depreciation is $4,680 annually. 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.
First-hand insights: Is the cost of car ownership worth it?
As car ownership costs rise, some drivers are reconsidering how many cars are worth owning — if any. To get first-hand perspectives, Bankrate’s insurance editorial team turned to r/MoneyDiariesACTIVE, a women-focused Reddit forum dedicated to sharing money tips and stories. Some users shared their tips for reducing the cost of car ownership, while others reported that going entirely car-free had saved them a significant amount of money.
Oct. 7, 2023
Gas prices are the killer
I live in a very car-centric area so not owning a car is impossible. I paid my car off in 2018 and my husband does my maintenance for me, so it’s not too bad. HOWEVER —
Gas prices are hovering under $7 where I live and it’s bonkers that my small car takes $60 to fill up. Remote work has made this so much better for me. Previously, I was spending $200-$250/mo on gas alone to and from work (45 minute commute each way in traffic), now I’m only paying $60/mo on gas.
If I had an option for public transit, I’d take it. It does “exist” here but it’s unreliable.
via Reddit community
Oct. 7, 2023
One-car household
We have been a one-car household for 8 years now. My work at a university makes it easier to find places to live where that’s possible, but we’ve always had to make intentional choices about our specific locations to make that work.
Over the last 6 months, car costs totaled $4300, our second-highest spending category. Just over half of that is our car payment ($430/month). We put 50% down on a low mileage used Camry and chose a 3-year loan. $700 for insurance, $419 for gas, and $300 for maintenance in that time period.
via Reddit community
Oct. 7, 2023
$900/per month saved
Moving from a car-centric area to a city where we can be car-free has saved my family so much money. And our rent is actually a lot cheaper too. I don’t feel constricted at all in mobility because it’s very common to be car-free and transit is very good and cheap. If I had to think about how much it’s saved us… I think around $900/month, between payments, insurance, and gas.
via Reddit community
*The quotes and citations included on this page have been verified by our editorial team and are accurate as of the posting date. Outlinked content may contain views and opinions that do not reflect the views and opinions of Bankrate.
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 immediately with a lower price tag and down the road with lower insurance, repair and gas costs. When considering a new vehicle, you may want to research local gas prices, customer reviews, average maintenance costs and average insurance costs across various makes and models before settling on which car to buy.
- 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, so you will need to replace yours at some point. 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.
Frequently asked questions
