How Much Does a Car Cost?

In 2021, the average car costs $42,258 with an average payment of $563 per month, according to data from Kelley Blue Book and LendingTree. Beyond the sticker price and payments, however, there are the costs of gas, insurance, oil changes and other expenses car owners need to consider.

Comparing total ownership costs can be far more important than, say, choosing the vehicle’s color, yet it can be hard to do. Here’s how to figure out how much you’ll really be spending on your new vehicle.

How to determine the total cost of car ownership

Consider averages

According to AAA and Kelley Blue Book, this is how much a new car costs to own per month, including additional costs like fuel, insurance and tires.

See here for more on AAA’s methodology and KBB’s research.

Use a calculator

For a more accurate estimate based on your car’s make and model, opt for a car ownership calculator.

The calculator takes into account major car-related expenses, including:

Financing. Most people need an auto loan to buy a car. Based on LendingTree’s auto debt statistics, the average car loan APR in the first quarter of 2021 was 9.46%. For a new car, the average loan term was close to six years, and the average amount borrowed was $34,635. This results in $10,887 paid in interest over the life of the loan. If you’re in the market, here are the best auto loan rates.

Insurance. The national average cost of auto insurance is about $73 a month, or $876 a year.

Taxes, title and registration. While some states have no vehicle sales tax (check out the best states to buy a car), others have high sales taxes on top of annual property taxes. When you first buy a vehicle, expect to spend about 8% to 10% of the vehicle’s price in taxes and fees, including those charged by the dealership.

Dealership fees. Here are dealership fees to watch out for when you are shopping for a vehicle. Some are unavoidable, like destination charges on new vehicles. Others are optional add-ons, like extended warranties.

Fuel. You could be looking at an average of around $160 a month in fuel costs as part of the costs of owning a vehicle, according to calculations based on data from theFederal Highway Administration, AAA and the Bureau of Transportation Statistics. Exactly how much you spend on gas, of course, depends on how much you drive and the average cost of gas in your area. To find how much you might spend on fuel for a trip, you could use the gas cost calculator provided by the U.S. Department of Energy.

Maintenance. As we discussed above, maintenance costs can be hard to nail down. AAA data shows that maintenance for a new car averages about $199 each month if you drive 15,000 miles a year. Those costs can shoot up as the car gets older and the warranty covers less.

Depreciation. The largest single contributor to the average annual cost for a new car is depreciation. Most new vehicles are worth only half of their original price after three years, which, conveniently, is when most comprehensive warranties expire. The best way to limit depreciation is to buy a used car.

New vs. used car costs

Plainly put, used cars cost less to buy. Americans borrow an average of $34,635 for new vehicles and $21,438 for used vehicles. Yet, used cars generally have higher maintenance and repair costs due to breakdowns and diminishing warranty coverage. It’s part of the trade-off when you consider whether to buy a new or used car.

Data from the U.S. Bureau of Labor Statistics shows that in 2020, people spent $879 a year on car repairs and maintenance.

To lessen the risk of having to shell out money for maintenance or repairs:

→ Look into dependable vehicles: According to J.D. Power’s most recent vehicle dependability study, Lexus, Porsche, Kia, Toyota and Buick are the top five highest-ranked brands for reliability. Kelley Blue Book also features annual awards for specific cars based on their five-year cost to own ranking.

→ Perform regular vehicle maintenance: The best way to avoid a major repair is to keep up with your car’s maintenance schedule.

→ Have a rainy day fund: It’s a smart idea to put aside money each month in case something turns sour. A traditional budget rule recommends you use 50% of your income to pay bills, 30% on extras like entertainment and put 20% directly into your savings account.

→ Consider an extended warranty. A high-tech, basic or powertrain vehicle service contract (VSC) can prevent you from having to pay any large repair fees out of pocket. Here’s how to find the best extended-car warranty.

→ Think about getting an electric vehicle (EV): While EVs tend to cost more than conventional cars upfront, they have far fewer moving parts that can break.

Relevant car cost questions

How much does it cost to paint a car?

According to consumer price tracking website CostHelper, the average cost for a basic car paint job is $566, but it can reach as high as $7,500 for the highest quality. The exact price will depend on the size of the vehicle, the quality and color of the paint and any imperfections, like rust spots and scratches, that need to be treated beforehand. If you are feeling particularly industrious, you could get a beginner’s car painting kit for around $500 with everything you need to paint a medium-sized car, like a Ford Mustang, including the DYC sprayer.

How much does it cost to ship a car?

Car shipping can cost about $1 a mile if you’re shipping the vehicle within a 500-mile radius, but that rate drops the further you need to ship. For example, shipping a compact SUV from New York City to San Francisco can cost less than $1,300.

How much does a car battery cost?

You can expect to spend between $100 and $200 on a car battery, depending on the car and the quality of the battery.

How much does a Tesla cost?

Tesla prices tend to shift like sand in a desert. The best way to know what a Tesla costs is to look at the “purchase price” rather than the “price after estimated savings” for the model you want on the Tesla website. The “price after estimated savings” is what Tesla often advertises, but it includes potential federal tax incentives and a few years of predicted gas savings.

Is buying a car worth it?

In the euphoria of getting a new car, it can be almost too easy to overlook the total cost of ownership. If you live in a city, consider other alternatives that may lessen the cost of your commute, especially if you have to pay for parking at work and/or at home.