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What is the Total Cost of Car Ownership?

Whether you’re looking forward to that new car smell or buying a used car that fits your adventurous lifestyle, getting the facts on the cost of ownership up front will help you make the best decision in the long run.

Once you narrow your options down to two or three choices, it’s worth considering the potential costs of owning a car over a 4-year and 8-year period before making a decision. Continue reading to learn about what factors to consider when estimating the true cost of owning a car.

What’s Included in the Total Cost of Car Ownership?

The true cost of owning a car lies in the maintenance and upkeep details. Meaning, the cost of car ownership factors in things like insurance, fuel, registration and other associated costs. Keep in mind some of these key expenses when you’re thinking of buying your next vehicle.

Interest on car payments

You’ll want to know how much you’re being charged above the price of your vehicle.  That can depend on how your car loan is structured and whether you can take advantage of special pricing. Longer car loans typically mean more interest. Shop around to make sure you’re getting the best interest rate you can.

Car maintenance

It’s always a good idea to plan on some maintenance expenses, even for cars with a bumper-to-bumper warranty. Some sites report owner feedback on average maintenance costs, which can help you with cost estimates. Maintenance needs for new and used cars include:

  • Oil changes
  • Inspection services
  • Wheel rotation
  • Wheel alignment
  • Cooling system maintenance
  • Spark plug replacement
  • Fluid and filters replacement
  • Battery replacement
  • Timing belt replacement
  • Basic brake service
  • Air conditioning service

Car insurance

Insurance is a requirement, and your cost and car insurance coverage can vary widely. Different vehicles are insured at different rates, so check with your insurance agent before buying a specific make and model. You’ll also want to work with your agent to make sure you’re getting the coverage you need first, then look at the cost of insurance. Remember, you might find cheaper rates, but you could be skimping on coverage. Read more about your auto insurance estimate.


Every car has a miles-per-gallon estimate for city and highway travel. In order to understand the total cost of car ownership — not to mention to appropriately adjust your budget — you’ll want to compare the cost of filling your tank (don’t forget to look at tank capacity). The U.S. Government has a handy fuel calculation tool you can use. Simply select the make, model and year use it to compare several vehicles. Gas efficiency can drastically change the total cost of owning a car.


It’s important to know what you’ll get when you want to sell your car or trade it in. Initial cost of your car is one thing, but depreciation drops at differing rates. Do your research so you can compare the future value of each of your new or used car options.

Roadside assistance

Even when buying a new car, you can run out of gas or get a flat tire. And once your car gets some miles on it — especially if you buy a used car — breakdowns can happen. It doesn’t have to be a disaster. Some manufacturers offer roadside assistance for a certain number of miles or time after purchase. In other cases, you can save by adding Emergency Roadside Assistance coverage to your auto insurance.

License/registration fees

In addition to up-front costs, you’ll need to update your registration. Check on prices and timing with your state’s Department of Motor Vehicles.

How Does the Cost of Car Ownership Change Over Time?

The cost of car ownership over time may change depending on a variety of things like repairs and loan changes. Newer cars, for instance, can be more expensive due to loans, whereas older vehicles may prove costly due to maintenance and repairs. Let’s take a look:

Length of ownership

The length of time you plan to own your car matters. If you own your car for five years, the median cost of car ownership averages at about $9,200 a year, according to AAA’s 2019 cost report. If you own your car for eight years, the average cost of owning a car drops significantly because you’re enjoying a few years without a loan. However, going beyond eight years means you could be faced with higher repair costs.


In the first five years of car ownership, repairs are often your lowest factor in the cost of ownership. In used cars, that may be a different scenario. The cost of owning a used car should include repairs in the ballpark of $100 to $500 annually, according to a survey by Consumer Reports. Your costs may vary, so be sure to keep a rainy-day fund in case something were to occur to your used vehicle.

Average Cost of Owning a Car Per Month and Per Year

The average cost of owning a car per month comes out to about $661, according to the 2019 vehicle cost report conducted by AAA. This totals out to roughly $8,000 annually, on average. This cost factors in fuel per mile — up to 10,000 miles — along with other costs associated with depreciation, insurance and maintenance.  Let’s look further into the cost per month and per year.

Monthly ownership cost by vehicle type

  • Small sedan: $505
  • Medium sedan: $624
  • Large sedan: $750
  • Small SUV: $599
  • Medium SUV: $729
  • Minivan: $725
  • Half-ton, crew-cab pickup: $764
  • Hybrid vehicle: $567
  • Electric vehicle: $625

Annual ownership cost by vehicle type

  • Small sedan: $6,060
  • Medium sedan: $7,487
  • Large sedan: $8,994
  • Small SUV: $7,182
  • Medium SUV: $8,743
  • Minivan: $8,705
  • Half-ton, crew-cab pickup: $9,163
  • Hybrid vehicle: $6,799
  • Electric vehicle: $7,495

Protect Your Car with Personalized Coverage from American Family Insurance

One of the best ways to reduce the overall cost of vehicle ownership is to make sure you have the right insurance coverage to help in case of an event. Whether you’re looking for protection through a comprehensive auto insurance policy, or a vehicle service plan like ForeverCar to get you back on the road, we have you covered. All you have to do is reach out to your American Family Insurance agent to get started!

Now that you have a better idea of the cost of a car, are you ready for the next step? Visit our New Car Buying Resources page to help you narrow down the search and leave the dealer’s lot in confidence.

This article is for informational purposes only and includes information widely available through different sources.


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Related Topics: On The Road , Car Insurance , Car Buying , Car Maintenance