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Owning a Car Costs $8,698 Per Year

By Aaron Crowe

Cost of Car OwnershipExcluding the purchase price, owning and operating a car costs $8,698 in 2015, according to AAA.

That’s a lot of cash to put out for something you’re likely to get rid of in 10 years or so and replace with another car. Operating a vehicle is the second-highest expense in U.S. households, behind housing and just ahead of food costs, according to the U.S. Bureau of Labor Statistics.

The expenses of owning a car fell 2 percent in 2015, due to drops in gas prices and finance charges, AAA found in its study. The $8,698 figure is for a typical sedan driven 15,000 miles annually, working out to 58 cents for each mile driven, or nearly $725 per month.

Most of the costs of a car are expected — such as gas and maintenance — but others such as finance charges, insurance and depreciation may not be given much thought by consumers. Here’s a breakdown of the costs of driving a car:

Depreciation: This was the biggest cost of owning a car, at 42 percent of AAA’s total, or $3,654 per year. New cars can lose around 10 percent of their value the minute their driven off the car dealer’s lot, and around 20 percent total loss a year later.

Cars are meant to be driven, which makes them more likely to break and lose their value, says Akshay Anand, a senior analyst at Kelley Blue Book.

Owning a car that’s only a few years old can mean you’re already behind on the technology of newer cars, says Kyle Baskin, owner of Top Shelf Lifestyle, a luxury car rental company in Los Angeles.

“Cars are like phones,” Baskin says. “They keep coming out with new models and people don’t want them anymore.”

Fuel: Gas accounted for 19.3 percent of the annual cost of running a car, or 19.3 percent.

Better fuel economy and cheaper gas prices helped make the cost of owning and operating a sport utility vehicle slightly cheaper than that of a large sedan this year, according to AAA.

Low gas prices can help sell vehicles that don’t get good gas mileage, but consumers should still look for high MPG (miles per gallon) vehicles if they want to save money in the long run, Anand says.

“In the back of your mind you want a car that has good mpg, because you don’t know where gas prices will be in five years,” he says.

Insurance: At $1,115 per year, or 12.8 percent of the annual cost of owning a car, insurance is the third highest cost.

While rates vary by driver and geographical area, consumers should consider the type of car they’re buying when comparing insurance rates. A car with low mpg that’s packed with extras such as an infotainment system, advanced safety features and is made of lightweight materials can be more expensive to repair and insure.

Having your car totaled in an accident can lead to more expenses than insurance. If you can’t find a car for the amount of money your insurer is reimbursing you for the loss of your car, you may have to come up with more money on your own to afford the car you want. Setting money aside in an emergency fund each month would help make that expense easier.

Maintenance: At $766 per year, or 8.8 percent of the annual cost, maintenance can look a lot lower than most people think it is. It includes labor time and repair costs for factory-recommended maintenance, along with the average costs of an extended warranty.

Baskin, the luxury car rental business owner, says maintenance costs can skyrocket for high-end cars. A privacy curtain on a Mercedes Maybach that’s operated by motor and a remote control costs $10,000 to repair, he says.

“God forbid, the transmission goes out,” Baskin says of exotic cars that aren’t under warranty.

Not doing regular maintenance, such as oil changes and battery inspections, can lead to bigger problems later.

Finance charges: $669, or 7.7 percent of the annual cost. These costs dropped in 2015, down 21 percent as more manufacturers offered low finance rates to attract buyers.

However, buyers should be aware of finance charges or other dealer fees that aren’t spelled out in the contract or aren’t clear, Anand says.

“A lot of times, the money you pay down the road can be a lot more than you’re looking at,” he says.

License, taxes and registration: $665 or 7.7 percent of the annual cost. These expenses are set by state governments, so there isn’t much consumers can do to avoid them, other than shopping in another area with lower tax rates.

Tires: $147 or 1.7 percent of annual cost. Good tire maintenance is important, Anand says, and driving aggressively can cause the need for more frequent tire replacement.

“Everyone knows you have to replace your tires,” he says.

Tickets: While this isn’t a cost that AAA put into its figures, traffic violations for speeding, parking illegally and other infractions can add up for drivers who aren’t careful, Anand says.

Speeding in California, for example, can cause auto insurance rates to go up by as much as $538, according to, an app that helps drivers fight tickets.