The total cost of car ownership is everything you spend to buy, run, and eventually part with a vehicle, not just the price on the window sticker or the monthly loan payment. It includes the value the car loses over time, interest on financing, fuel, insurance, maintenance and repairs, tires, registration, and taxes. Many of these costs are easy to overlook when you are comparing cars on a dealer lot.
Looking at the full picture can change which car makes sense for you. Two vehicles with similar monthly payments can cost very different amounts over five years. This guide breaks down each cost category using the latest figures from AAA’s annual driving cost study, shows how to estimate your own number, and highlights practical ways to keep ownership costs in check.
What AAA’s Latest Study Shows
AAA publishes an annual study called “Your Driving Costs” that estimates what it costs to own and operate a new vehicle for five years and 75,000 miles. As of September 2026, AAA put the average annual cost of a new vehicle at $12,863, or about $1,071.92 per month. The study is based on top-selling models across seven vehicle categories, with a sales-weighted average price (MSRP) of $39,376.
AAA’s 2026 fact sheet breaks the total into these categories:
| Cost category | AAA 2026 average | What it covers |
|---|---|---|
| Depreciation | $4,422 per year | Purchase price minus estimated trade-in value after 5 years and 75,000 miles |
| Insurance | $2,098 per year | Full coverage for a driver under 65 with a clean record |
| Finance charges | $1,184 per year | Interest on a 5-year loan with 15% down |
| License, registration and taxes | $802 per year | Taxes and fees at purchase plus annual fees |
| Fuel | 17.3 cents per mile | Based on regular gas averaging about $4.15 a gallon |
| Maintenance, repair and tires | 11.7 cents per mile | Routine maintenance, an extended warranty, wear repairs, one set of tires |
AAA notes that methodology changes mean the 2026 figure is not directly comparable to its 2025 estimate of $11,577. Your own costs will differ depending on where you live, how much you drive, and what you buy.
Depreciation: The Biggest Cost You Never See
Depreciation is the gap between what you pay for a car and what it is worth when you sell or trade it in. AAA calls it the largest single cost of owning a new vehicle, averaging $4,422 a year in its 2026 study. You do not write a check for depreciation each month, which is why it is easy to ignore, but it shows up the day you sell.
AAA’s 2026 study also found that electric medium sedans had roughly twice the depreciation of comparable gas models, which helped make their annual ownership cost about 29% higher in that category, even though charging costs were much lower than gasoline.
Ways to reduce depreciation’s bite include buying a lightly used vehicle that has already taken its steepest early drop, choosing models known to hold value, and keeping a car longer so the loss is spread over more years.
Financing Costs
If you borrow, interest is part of what the car costs. AAA’s model assumes 15% down and a five-year loan at the national average rate, producing $1,184 a year in finance charges.
Loan length matters a lot. The Consumer Financial Protection Bureau (CFPB) gives an example: a $20,000 loan at 4.75% costs $1,498 in interest over 36 months, but $3,024 over 72 months. The longer loan cuts the monthly payment but roughly doubles the interest. The CFPB also warns that longer loans make it more likely you will owe more than the car is worth. Our guide to comparing loan offers explains how to look beyond the monthly payment.
Insurance
Insurance averaged $2,098 a year in AAA’s 2026 study, based on full coverage for a driver under 65 with more than six years of experience and no accidents. Your premium may be far higher or lower depending on your age, driving record, location, the vehicle, and the coverage you choose. Get insurance quotes before you buy, not after, because the same driver can pay very different rates for different models. Our article on how to compare car insurance plans covers what to look at.
Fuel or Charging
AAA’s 2026 study estimated fuel at 17.3 cents per mile, using regular gas averaging $4.152 a gallon over the 12 months ending May 2026, up 31.8% from the prior study. For electric vehicles, AAA assumed home electricity at 18 cents per kilowatt-hour and found charging costs about 66% to 70% lower than gas fuel costs across the categories it compared.
Fuel is the cost most sensitive to your habits. Commute length, highway versus city driving, and fuel prices in your area can swing this number widely.
Maintenance, Repairs and Tires
AAA estimated maintenance, repair, and tires at 11.7 cents per mile. Its figure includes routine maintenance from the manufacturer’s schedule, wear-item repairs, one set of replacement tires, and the cost of an extended warranty.
On that last point, the Federal Trade Commission (FTC) notes that auto service contracts, often called extended warranties, are optional and can be expensive. Before buying one, it suggests checking whether coverage overlaps your factory warranty, what deductibles apply, and what is excluded. The FTC also explains that a dealer cannot deny warranty coverage simply because you had routine maintenance done somewhere else. Keep records of all service.
Registration, Taxes and Fees
AAA’s 2026 average for license, registration, and taxes was $802 a year, which includes taxes and fees paid at purchase plus annual registration. These vary greatly by state. Some states charge annual fees based on a vehicle’s value or weight, so check your state’s motor vehicle agency for specifics.
How Vehicle Type and Mileage Change the Total
The kind of vehicle you choose has a big effect. As of September 2026, AAA’s cost per mile ranged from about 62 cents for small sedans to $1.10 for half-ton pickups:
| Vehicle category | AAA 2026 cost per mile |
|---|---|
| Small sedan | 61.73 cents |
| Medium sedan | 70.37 cents |
| Subcompact SUV | 71.68 cents |
| Compact SUV | 77.80 cents |
| Midsize pickup | 87.26 cents |
| Medium SUV | 96.32 cents |
| Half-ton pickup | $1.10 |
Mileage matters too. Because many costs are fixed, the cost per mile falls as you drive more. AAA’s 2026 figures show about $1.10 per mile at 10,000 miles a year, 86 cents at 15,000, and 74 cents at 20,000.
How to Estimate Your Own Cost
You can build a rough five-year estimate for any car you are considering:
- Depreciation: purchase price minus an estimated resale value after five years.
- Financing: total interest from the loan disclosure or a loan calculator.
- Insurance: a real quote for that specific vehicle, times five.
- Fuel: annual miles divided by the car’s mpg, times your local fuel price, times five.
- Maintenance and repairs: the manufacturer’s schedule plus a cushion for tires and wear items.
- Registration and taxes: sales tax at purchase plus annual fees from your state.
Hypothetical example: Alex is considering a $30,000 sedan, driving 12,000 miles a year. Alex estimates $13,000 in depreciation over five years, $3,500 in loan interest, $1,800 a year for insurance ($9,000), fuel at 32 mpg and $4.00 a gallon ($1,500 a year, $7,500 total), $4,500 for maintenance and tires, and $3,000 for sales tax and registration. The five-year total is about $40,500, or roughly $8,100 a year and $675 a month. That is far more than the loan payment alone would suggest.
Building that monthly figure into your budget, and keeping a separate savings cushion for repairs, helps prevent surprises. If you plan to finance, our guide to understanding loan interest rates can help you estimate borrowing costs.
Frequently Asked Questions
What is the biggest cost of owning a car?
For new vehicles, depreciation is typically the largest. AAA’s 2026 study put it at $4,422 a year on average, more than insurance or fuel.
Is a used car always cheaper to own?
Not always. A used car usually depreciates less, but it may need more repairs and could carry a higher loan rate. Compare the full five-year estimate for each option.
Are electric vehicles cheaper to own?
It depends on the category. AAA found EV charging costs far lower than gas, but in medium sedans the higher depreciation of EVs made annual ownership costs higher. Run the numbers for the specific models you are comparing.
Does driving more make a car cheaper per mile?
Per mile, yes, because fixed costs like insurance and registration are spread over more miles. Your total yearly cost still rises with more fuel, maintenance, and depreciation.
Bottom Line
The total cost of car ownership is often much higher than the purchase price or monthly payment suggests. As of September 2026, AAA estimated about $12,863 a year for an average new vehicle, with depreciation the largest piece. Before buying, estimate depreciation, interest, insurance, fuel, maintenance, and fees for each car on your list, and choose the one whose full cost fits your budget.
Sources
- AAA Newsroom – New Vehicle Ownership Costs Hit $12,863 Annually
- AAA – Your Driving Costs 2026 Fact Sheet
- Consumer Financial Protection Bureau – How do I compare auto loan offers?
- Federal Trade Commission – Auto Warranties and Auto Service Contracts
This article is for general information only and is not financial advice. See our Disclaimer.
