The True Cost of Owning a Car: Where the Money Actually Goes
Most car budgets start and end with the monthly payment. AAA's Your Driving Costs study, which estimates what it costs to own and drive a new car for five years and 75,000 miles, shows why that misses most of the picture. Its 2025 edition put the average total at $11,577 a year, about $965 a month, across 45 popular models.
To run these numbers for the cars you are considering, use the car cost of ownership calculator.
The six costs, by size
AAA's 2025 weighted averages, at 15,000 miles a year:
| Cost | Per year | How it works |
|---|---|---|
| Depreciation | $4,334 | Purchase price minus resale value, spread over the years you own it |
| Fuel | 13.00 cents a mile | About $1,950 a year at 15,000 miles |
| Insurance (full coverage) | $1,694 | Varies widely by driver, location and vehicle |
| Maintenance, repairs and tires | 11.04 cents a mile | About $1,656 a year at 15,000 miles |
| Finance charges | $1,131 | Interest on the car loan |
| License, registration and taxes | $813 | Set by your state and local government |
AAA calls depreciation, "the difference between a car's purchase price and its resale value," the largest ownership cost. It never shows up as a bill, which is why it is easy to forget: you pay it all at once when you sell or trade the car for less than you paid.
Which costs you can control
- Depreciation: the price you pay, which model you choose, and how long you keep it. A model that holds its value well, or a car bought a few years old, can lose fewer dollars while you own it.
- Financing: a larger down payment, a shorter term and a better rate. The auto loan calculator shows the interest for any loan.
- Insurance: shop quotes for the specific model before you buy, since premiums can differ between models for the same driver.
- Fuel: efficiency and how much you drive. This is the cost that grows fastest with mileage.
- Maintenance: driven mostly by the model and the miles; following the maintenance schedule can help avoid bigger repairs.
- Registration and taxes: largely fixed by where you live and the car's value.
Gas, hybrid or electric?
The 2025 study added a head-to-head comparison of electric, gas and hybrid versions in four vehicle categories. For medium sedans, AAA's yearly totals at 15,000 miles were:
| Medium sedan | Electric | Gas | Hybrid |
|---|---|---|---|
| Fuel | $729 | $1,669 | $1,100 |
| Maintenance | $1,358 | $1,786 | $1,551 |
| Depreciation | $7,088 | $3,462 | $3,535 |
| Insurance | $2,027 | $1,572 | $1,571 |
| License, registration and taxes | $1,064 | $613 | $721 |
| Finance charges | $1,427 | $854 | $1,001 |
| Total per year | $13,692 | $9,956 | $9,479 |
In that comparison the electric sedan was cheapest to fuel and maintain, but its depreciation was about twice the gas version's, and its insurance, registration and finance charges were higher, so it cost the most overall. The hybrid came out lowest. These are averages for the specific models AAA studied; prices, incentives, local electricity rates and how a particular model holds its value can change the outcome, which is why it is worth running your own numbers.
A simple way to compare two cars
- Decide how long you will keep the car and how far you drive each year.
- Get insurance quotes for both models.
- Estimate depreciation from used prices for the same models a few years old, or from lease residuals.
- Use your local fuel or electricity price and each car's efficiency.
- Put it all into the calculator and compare totals, not payments.
Sources
- AAA, Your Driving Costs 2025 (September 2025)
- AAA Newsroom, AAA: New Vehicle Costs Drop to $11,577 (September 16, 2025)
This article is general information, not financial advice.