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The True Yearly Cost of Owning a Car

By the Money Years editors · October 28, 2026

Ask most people what their car costs and they will mention the monthly payment and gas. Those are the costs you notice, but they are only part of the bill. Depreciation, insurance, maintenance, interest and registration add up to far more, and together they make a car one of the biggest expenses in most household budgets after housing.

What AAA’s 2026 study found

AAA’s yearly Your Driving Costs study estimates that owning and running a new vehicle costs about $12,863 a year in 2026, or roughly $1,072 a month, based on 15,000 miles a year and keeping the car for five years. AAA changed its method this year and added more electric and hybrid models, so it warns against comparing the figure directly with earlier years.

Here is roughly where that money goes:

Costs vary a lot by type. AAA puts a small sedan at about $9,259 a year and a half-ton pickup at about $16,449.

Depreciation: the cost you never see

Depreciation is the biggest single cost and the easiest to forget, because no bill arrives for it. A new car typically loses a large share of its value in the first few years. You only feel it when you sell or trade in, and find the car is worth much less than you paid. Spread over the years you own it, that loss is a real cost, and it is why buying a car that is a few years old is one of the most reliable ways to save money.

Working out your own figure

Your own costs may be quite different from the national average. The car cost calculator adds up the price you paid minus what you expect to sell for, divided by the years you keep it, plus fuel, insurance, maintenance, loan interest and fees.

For example, a $32,000 car sold for $14,000 after six years loses about $3,000 a year. Add 12,000 miles of fuel at 30 miles per gallon and $3.40 a gallon, about $1,360; $1,900 of insurance; $900 of maintenance; $1,000 of loan interest; and $600 of registration and parking, and the total comes to about $8,760 a year, or $730 a month. That is less than the AAA average because of the lower mileage and cheaper car, but still far more than the loan payment alone.

Cost per mile

Dividing the yearly total by the miles driven gives one of the most useful numbers for everyday decisions. On AAA’s figures, $12,863 over 15,000 miles is about 86 cents a mile. That means a 30-mile round trip to a store across town really costs about $26 once every cost of owning the car is counted, not just the few dollars of gas you notice.

Not every cost rises with each mile, though. Depreciation, insurance, interest and registration are largely fixed once you own the car, while fuel, maintenance and tires go up with distance. So the cost of one extra trip is closer to the running costs alone, around 29 cents a mile on AAA’s numbers, while the decision to own a car at all, or a second one, carries the full 86 cents. That distinction helps when you are weighing a second car against using ride-shares or rentals for the occasional trip.

New or nearly new?

The fastest depreciation happens in the first few years, which is where the biggest saving lies. As an illustration, suppose a new car costs $40,000 and is worth about $24,000 after three years, a common pattern for mainstream models. The first owner loses about $5,300 a year in value. If the second owner buys it at three years old for $24,000 and sells it five years later for $14,000, they lose about $2,000 a year, less than half as much, while still driving a modern car with years of life left.

The trade-off is that older cars can need more repairs and may not have the newest safety features, and used-car prices rise and fall with the market. Buying a well-reviewed model with a service history, and having it checked by an independent mechanic, reduces the risk.

Leasing, briefly

A lease turns depreciation into a monthly payment. You pay for the value the car loses during the lease, plus interest and fees, and hand it back at the end. Leasing can make sense for people who want a new car every few years and drive predictable, modest mileage, but it is usually the most expensive way to drive over the long run, because you are always paying for the steepest part of the depreciation curve. Excess mileage and wear charges can add to the bill at the end.

What a cheaper car could grow into

Choosing a car that costs $300 a month less to own, through a cheaper model, a used purchase or simply keeping your current car longer, frees money that can work for you. Invested at an average 7% a year, $300 a month grows to about $51,900 in 10 years and about $156,000 in 20. Few everyday decisions have a bigger long-term effect, which is why the car is often the first place financial planners look.

Common questions

How much does it cost to own a car per month? About $1,072 a month for a new car on AAA’s 2026 average, or less for a cheaper or used car driven fewer miles.

What is the biggest cost of owning a car? Depreciation, at about $4,422 a year in AAA’s 2026 study, followed by fuel and insurance.

Is it cheaper to own an electric car? Electric vehicles usually cost less to fuel and maintain, but can have higher purchase prices, insurance and depreciation. Whether they are cheaper overall depends on the model, your electricity rates and how much you drive.

Ways to cut the cost

Keeping a car longer is the single biggest saving, because depreciation slows sharply after the first few years. Buying used, choosing a car with good reliability and fuel economy, and shopping for insurance every year or two all help too. A shorter loan or a larger down payment cuts finance charges, and the car loan payoff calculator shows what extra payments save.

For some households the biggest saving is going down to one car, or none. If public transport, cycling and the occasional ride-share or rental cover your needs, the money saved can be large. The commute cost calculator compares driving with other options for your daily trip.

What it means long term

Car costs add up over a lifetime. Spending around $9,000 to $13,000 a year on driving for 40 years is several hundred thousand dollars, and invested instead it would be far more. That is not a reason to give up a car you need, but it is a strong reason to choose carefully, keep it for a long time and count the whole cost, not just the payment.

The bottom line

The true cost of owning a new car is about $12,900 a year on AAA’s 2026 figures, led by depreciation, fuel and insurance. Used cars driven fewer miles cost less, but almost every car costs well more than its monthly payment. These figures are averages and estimates; your own costs depend on the car, where you live and how much you drive.

This guide is general information for planning, not personal financial advice. Figures were checked on the date shown and can change.