The Average Cost of Owning a Car

Buying a car can be an exciting experience — until the first insurance premium comes due or you need to fill up the tank. That’s when you start to realize the multiple costs involved in car ownership. And that’s not counting the cost of the car itself. The average cost of a new car is nearly $50,000, while buyers of used cars paid slightly more than $25,000. The possibility of new tariffs impacting imported cars and car parts may increase the price more than usual in the coming months, adding another layer of complexity to an already fraught financial market. Add in generally high insurance, maintenance and gas costs, and the average cost of a car can make a significant dent in your wallet.

How much does it cost to own a car?

How much does a car cost overall? Let’s start with the average cost of vehicles in the U.S. According to Kelley Blue Book, in April 2025, the average cost of a new car was $48,699, while used cars averaged $25,547. Your own cost, of course, will vary depending on the make, model, trim and age of the vehicle you purchase. But the sticker price is only the beginning — there are other costs involved in owning a vehicle.

Bankrate’s Hidden Cost of Car Ownership Study, published in August 2024, shows that Americans spend an average of $6,684 per year in hidden vehicle expenses in addition to their lease or loan payments. This study examined the annual cost of car insurance, gas, taxes, and maintenance and repair costs. Since then, everything has gotten more expensive. As of May 2025, the average cost of full coverage car insurance increased to $2,692, putting the updated hidden expenses figure to be $7,047. When we add in the average monthly payment for new and used cars, Americans spend about $15,951 per year on costs associated with a new car and $13,347 for a used vehicle.

Factors affecting the cost of a car

The secondary costs of owning and maintaining a car can be significant. They include insurance, gas, maintenance costs and taxes. Let’s take a closer look at how it all breaks out.

Insurance

The average cost of car insurance as of May 2025 is $2,692 per year for full coverage and $808 per year for minimum coverage. However, your premium may vary based on where you live, the type of vehicle you drive, your driving history, the insurance company you choose and the types and levels of coverage you purchase. Comparing quotes from different carriers and choosing the appropriate amount of coverage for your needs may help you avoid unnecessary expenses. Speaking with an insurance expert may help you maximize the value of your car insurance coverage.

Purchase price and financing

Based on April 2025 data from Experian, the average monthly loan payment for a new car is $742, while drivers paying on a used vehicle pay an average of $525 monthly. Based on these numbers, if you’re on a limited budget, you may be better off purchasing a good-quality used car to keep loan costs in check.

Gas

The national average cost of gasoline sits at $3.14 per gallon as of June 4, 2025, according to AAA. However, this rate changes daily and fluctuates drastically between winter and summer months. Your annual gas cost depends on vehicle selection and other factors, such as the per gallon cost of gas in your town.

Our August 2024 report determined that annual mileage can outweigh the average per gallon price of gas in your state, causing you to pay more at the pump. For example, drivers in Hawaii average 10,980 miles per year and pay $1,978 annually for gas expenses. In comparison, drivers in Indiana pay an average of $2,913 per year for gas despite the lower $3.68 per gallon price due to their higher mileage — an average of 20,560 per year.

Car repair and maintenance

According to the 2024 Your Driving Cost (YDC) report from AAA, the average price of routine maintenance is 10.89 cents per mile if you drive a 2024 medium sedan, with an average 15,000 miles driven annually. Considering these numbers, the average annual cost of car maintenance is approximately $1,634. Your own costs may vary based on your vehicle type, repair costs in your area and how much you drive. Tracking maintenance expenses like oil changes, tire rotations and windshield wiper replacements may help you better budget for these costs.

Taxes

Auto tax rates vary from state to state and even between municipalities. Some states, like Alaska and Delaware, do not have a typical tax for vehicle purchases — Alaska has a motor vehicle registration tax (MVRT) and Delaware has a gross receipt tax for the seller of goods. While your tax rate may be different depending on where you live and your vehicle, the national average annual car tax is $1,182.

Registration

Registration fees vary from state to state. While some states charge a flat fee for all vehicles, others base the registration cost on the age, horsepower or weight of a vehicle. In states like Oregon, car owners might pay as much as $316 in registration fees. Meanwhile, Alabama residents could pay as little as $23. You can find out how much registering a vehicle in your state will cost by contacting your state’s department of motor vehicles.

Depreciation

Depreciation isn’t actually a “cost,” but it is something to keep in mind, as your car’s value will decrease as soon as you drive it off the lot. A car’s depreciation varies widely based on its make and model, age, location, mileage and how well it’s taken care of. AAA’s YDC study reveals the average annual cost of depreciation is $4,680 annually. Typically, brand-new vehicles lose their value quickly, so buying used and keeping the car in good shape may help lower your car’s depreciation rate.

First-hand insights: Is the cost of car ownership worth it?

As car ownership costs rise, some drivers are reconsidering how many cars are worth owning — if any. To get first-hand perspectives, Bankrate’s insurance editorial team turned to r/personalfinance, a Reddit forum dedicated to financial and budgeting topics. The following comments were in answer to a person who asked about the real cost of owning a car.

*The quotes and citations included on this page have been verified by our editorial team and are accurate as of the posting date. Outlinked content may contain views and opinions that do not reflect the views and opinions of Bankrate.

How to save on car ownership

Although the cost of car ownership can be steep, owners may be able to take steps to keep expenses in check:

• Shop for cheaper car insurance: Insurance companies have different algorithms for calculating insurance rates, so some may offer you cheaper rates than others based on your personal rating factors and coverage needs. Comparing quotes from multiple providers may help you save on your premium.
• Choose your vehicle wisely: The make and model of the vehicle you buy may help you save immediately with a lower price tag and down the road with lower insurance, repair and gas costs. When considering a new vehicle, you may want to research local gas prices, customer reviews, average maintenance costs and average insurance costs across various makes and models before settling on which car to buy.
• Refinance your car loan: Some car loans can be refinanced at a lower rate. It may be wise to check and see if there’s a lower rate available, especially if the market has changed since the vehicle was purchased.
• Consolidate driving trips: The more you drive your car, the more maintenance it will generally require and the more you will spend on gas. It may be a good idea to consolidate errands into one trip, carpool with friends and neighbors and research public transportation options. Driving less might also mean lower car insurance costs, especially if you participate in a telematics program.
• Maintain your car: When it comes to vehicle repair costs, the best defense is a good offense. Having routine maintenance done may help prevent higher repair costs down the road. Early detection of issues can often bring repair costs down.

Frequently asked questions

• When is it time to replace a car?
  

  There may be multiple reasons why you might want to replace your car. A change in your lifestyle, for example, might mean a trade from a small sporty vehicle to a larger SUV that can safely carry car seats and toys for small children. An older car that has chronic maintenance issues that are nickel-and-diming you to death might also best be swapped for a newer model. If you are concerned about fuel efficiency, you could trade in a gas-guzzler for a more fuel-efficient model, or make the switch to a hybrid or electric vehicle. A change in jobs might mean a longer commute — another reason why you might want to prioritize fuel efficiency. Or you may just want to swap out a car you’ve been driving for a while in order to take advantage of the features available on a newer model.

• What cars have the lowest cost of ownership?
  

  According to AAA, small sedans usually have the lowest overall cost of ownership, followed by subcompact SUVs. When looking to buy a new car, it’s not just the purchase price that you need to consider, but also the costs of gas, maintenance and auto insurance. According to Bankrate’s analysis of average rate data from Quadrant Information Services, the Subaru Outback, Honda CR-V and Toyota Tacoma rank as the top three cheapest vehicles for full coverage car insurance.

• Why are used and new vehicles so expensive right now?
  

  According to Kelley Blue Book, 8 million fewer cars were made between 2021 and 2022 due to the pandemic, and industry experts predict that used vehicles will still be in short supply for 2025. Of the new cars that are being produced, many come with a price tag of over $60,000. The demand for used cars has surged due to high interest rates and the limited supply, which has led to higher prices. Rising prices for raw materials have also contributed to the overall increase in vehicle costs. With possible import tariffs impacting the cost of new vehicles and repair parts, the price of new and used cars will likely increase in the near future.

• How much does a vehicle depreciate?
  

  Vehicle depreciation rates can vary based on factors such as make, model and market demand. On average, new cars depreciate around 20 percent in the first year, primarily due to the initial drop in value when driven off the lot. Over the next few years, annual depreciation typically ranges from 15 to 20 percent. After about five years, the cumulative depreciation tends to be more gradual. On average, a vehicle may lose about 50 percent or more of its value over the first five years. Keep in mind that these are general estimates, and actual depreciation can vary based on factors like mileage, the vehicle’s condition and market trends. Regular maintenance and care can also influence a vehicle’s resale value.

• What is a realistic budget for a car?
  

  Creating a realistic budget for a new car can be challenging, especially when the cost of vehicles and insurance are so high. Ideally, your auto loan payment should be between 10 to 15 percent of your salary and the total cost of car ownership shouldn’t exceed 20 percent of your salary. Bankrate’s 2025 True Cost of Auto Insurance report found that on average, Americans spend 3.39 percent of their household income on full coverage car insurance, with some states like Louisiana paying as much as 6.83 percent. Before getting emotionally attached to a certain car, try getting insurance quotes for several types of vehicles before heading down to the dealership. This way, you know which car will fit within your insurance budget, which can help you narrow down your options.