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LearnCost of Ownership

Total Cost of Owning a Car

Complete guide to the six costs every car owner pays

Key Numbers at a Glance

  • The average car costs $12,182/year to own and operate (AAA, 2024).
  • Depreciation is #1: your car loses ~$4,042/year in value before you spend a dime on gas.
  • Most owners can save $1,500-3,000/year by optimizing insurance, financing, and maintenance.

Source: AAA 2024 Your Driving Costs Study, 15,000 miles/year average. Last verified: March 2026.

Avg Annual Cost

$12,182

Monthly Cost

$1,015

Cost Per Mile

$0.81

5-Year Total

$60,910

What is Total Cost of Ownership?

Total cost of ownership (TCO) is everything you spend on a vehicle from the day you buy it to the day you sell it. It goes far beyond the sticker price or monthly payment. TCO includes the purchase price, depreciation (how much value it loses over time), financing costs, insurance premiums, fuel or electricity, maintenance, repairs, parking, tolls, registration fees, and taxes.

Most buyers focus on the monthly payment, but that only captures about 25% of the true cost. A car with a lower monthly payment can actually cost more over 5 years if it depreciates faster, guzzles more fuel, or requires expensive insurance. TCO is the only honest way to compare what a vehicle will actually cost you.

The Six Costs of Car Ownership

Average annual costs for a typical sedan driven 15,000 miles/year. Source: AAA 2024 Your Driving Costs.

Depreciation

$4,042/yr
33% of total costLearn more

Financing

$813/yr
7% of total costLearn more

Insurance

$1,771/yr
15% of total costLearn more

Fuel & Energy

$2,306/yr
19% of total costLearn more

Maintenance & Repairs

$1,667/yr
14% of total costLearn more

Parking & Tolls

$1,583/yr
13% of total costLearn more

Cost by Vehicle Type

Annual ownership cost varies by vehicle category. Data from AAA 2024 study.

Vehicle TypeAnnual CostMonthlyPer Mile
Small Sedan$9,738$812$0.65
Medium Sedan$10,235$853$0.68
Small SUV$10,740$895$0.72
Medium SUV$12,182$1,015$0.81
Half-Ton Pickup$14,541$1,212$0.97
Electric Vehicle$11,388$949$0.76

Source: AAA 2024 Your Driving Costs Study, based on 15,000 miles/year. Last verified: March 2026.

Cheapest Vehicles to Own

Real cost data from Sidekick owners.

#1

2016 Hyundai Sonata

$3,926/year

#2

2006 Dodge Caravan

$4,104/year

#3

2019 MINI Hardtop

$4,192/year

#4

2018 Honda CR-V

$4,818/year

#5

2020 Mazda CX-3

$4,880/year

What You Should Actually Do

1

Know your total cost

Add up all six categories for your specific vehicle. Most people underestimate by 40%.

⏱ 15 minGet your free score
2

Shop your insurance

Get 3-5 quotes every 6-12 months. Average savings: $400-700/year.

⏱ 20 minCheck your rate
3

Check your loan rate

If your credit score improved since purchase, refinancing could save $50-150/month.

⏱ 10 minCalculate savings
4

Follow the right maintenance schedule

Your manufacturer's schedule, not the dealer's. Avoid unnecessary flushes and services.

⏱ 5 minRead the guide

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Frequently Asked Questions

What is the total cost of owning a car per year?

The average American spends roughly $12,182 per year on car ownership, according to AAA's 2024 Your Driving Costs study. This includes depreciation, insurance, financing, fuel, maintenance, and parking. Actual costs vary significantly by vehicle type — a midsize sedan costs about $10,200/year while a pickup truck can exceed $14,500/year.

What is the biggest cost of owning a car?

Depreciation is the single largest cost of car ownership, accounting for about 33% of total expenses. The average new car loses roughly $4,042 per year in value. This is also the cost most owners overlook because it doesn't show up as a monthly bill — it only becomes visible when you sell or trade in.

How can I reduce my total cost of car ownership?

The most impactful ways to reduce TCO: 1) Buy a 2-3 year old certified pre-owned vehicle to skip the steepest depreciation. 2) Shop your insurance every 6-12 months — rates change and loyalty discounts rarely beat competitive quotes. 3) Refinance your auto loan if your credit has improved since purchase. 4) Follow your manufacturer's maintenance schedule, not the dealer's upsell recommendations. 5) Use fuel rewards programs and apps like GasBuddy to save 10-20 cents per gallon.

Is it cheaper to own a used car or a new car?

Used cars are almost always cheaper to own overall. A 3-year-old vehicle has already lost 35-45% of its value, so you skip the steepest depreciation curve. Insurance is also typically 15-25% cheaper on used vehicles. The main trade-off is higher maintenance costs as the car ages, but this rarely offsets the depreciation and insurance savings in the first 5-7 years of ownership.

What does total cost of ownership (TCO) include?

TCO includes every expense associated with owning and operating a vehicle: depreciation (value loss over time), financing (loan interest and fees), insurance premiums, fuel or charging costs, scheduled and unscheduled maintenance, repairs, parking, tolls, registration, and taxes. Some calculations also include opportunity cost — what you could have earned by investing the purchase price instead.

How much does car insurance cost per year on average?

The average American pays $1,771 per year for full-coverage car insurance, according to AAA. However, this varies dramatically by state, age, driving record, and vehicle. Drivers in Michigan pay an average of $3,200/year while those in Maine pay around $900/year. Shopping your rate every 6-12 months is one of the easiest ways to save — the average driver saves $400-700 by switching.

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