The true cost of owning a car

Woman looking at digital tablet, leaning against vintage blue carImage: Woman looking at digital tablet, leaning against vintage blue car

In a Nutshell

The cost of owning a car is more than just the sticker price on the window. You’ll also need to spend money to use that car. And costs like fuel, parking, maintenance and insurance can quickly add up.
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Understanding all the costs associated with owning a car can help you figure out what you can really afford.

In addition to your monthly car payment, you’ll likely be shelling out for ongoing costs like gas, car insurance and regular maintenance.

Your monthly loan payment

While some people may pay cash for their vehicle, many opt to finance the cost by taking out an auto loan.

The larger your down payment, the less money you’ll need to borrow. Making a down payment can also reduce your monthly payment and the total amount of interest you’ll pay on the loan.

Vehicle cost (with taxes and fees)$37,300
Your down payment$5,000
Total car loan amount$32,300

The longer you stretch out your loan period, the lower your monthly payment will be. But with a longer loan term, you’ll pay more in total interest.

Total car loan amount$32,300
Interest rate7.5%
Loan term5 years
Total monthly payment$648
Total paid on loan$38,880

Additional costs of owning a car

Car insurance

Car insurance is required in most states. A variety of factors, including your driving history and age, can influence the cost of your car insurance. The combined average car insurance premium in the U.S. was $1,189 annually, or just over $99 per month, in 2018, according to the National Association of Insurance Commissioners’ Auto Insurance Database Report released in 2021.

Total monthly car loan payment$648
Average monthly car insurance premium$99
Total monthly cost of owning a car$747 per month


The Bureau of Labor Statistics found that consumers in 2017 spent an average of $1,968 per year, or $164 per month, on gas, other fuels and motor oil.

Monthly car loan payment and car insurance premium$747
Average monthly fuel cost$164
Total monthly cost of owning a car$911 per month


In 2017, AAA found that, on average, new vehicles cost $1,186 each year to maintain and repair.

Monthly car loan payment, car insurance premium, fuel$911
Average monthly maintenance cost$99
Total monthly cost of owning a car$1,010

Other potential costs 

Additional costs to consider can include …

  • Vehicle registration fees These fees may be annual or biennial. Some states charge a flat registration fee, while others use factors like your car’s age or fuel efficiency to determine your fee.
  • Vehicle property tax Some states also charge a vehicle property tax, based on your car’s value.
  • Parking Depending on where you work and live, you might need to factor parking costs into your budget. Parking costs vary by city.

Bottom line

The advertised price of a vehicle is just one consideration when calculating the total cost of owning a car. Expenses like car insurance, gas and maintenance can drive up your monthly costs. Before you buy, do a little research to get a sense of potential costs and to help make sure you can stick to your car budget.

About the author: Laura Malm is a writer and editor with a bachelor’s degree in journalism and strategic communication from the University of Minnesota. She is passionate about financial literacy and helping others feel confident in th… Read more.