The true cost of car ownership

On the Road 3 min read

Drivers often feel the greatest financial squeeze at the pump, because paying for gas is something you do constantly and gas prices fluctuate. But there are many other costs of car ownership to budget for, and unanticipated expenses are guaranteed to happen.

What are typical costs of owning or leasing a car? How can you prepare for the unexpected? And how can you lower some common costs?

Beyond paying for gas a few times per month, you should expect to pay for the following:

Buying or leasing the car in the first place

Obviously, this will be a big monthly cost if you lease or finance a car. Some drivers will pay for their car outright in cash, which means you won’t pay interest, but this is something that takes a while to save up for.

Maintenance and repairs

You may have a warranty on a new car that covers maintenance for the first year or so, but costs can increase once the warranty expires, especially as your car gets older. A Consumer Reports study found that newer cars could cost up to $500 per year to maintain, depending on the make and model, while older cars cost between $300 and $1,125 per year to maintain.


Auto insurance rates vary by state, the age of the insured driver, the type of car, and other factors. Your rates may increase for a time if you get into an accident.


Feeding a meter and paying a parking attendant don’t seem like much, but parking costs add up to a lot. This is especially true if you have to pay for a dedicated parking spot or access to a garage where you live or work.

Parking and traffic tickets

Drive and park carefully or it could cost you. Besides saving you money, avoiding speeding or illegal parking could help you and the people around you stay safe.


If you take a lot of road trips or commute on toll roads, you’ll spend a lot on tolls over the course of each year.

Taxes, registration, and fees

Annual fees for your car can vary by state. Residents of some states may have to pay property taxes on their cars each year. Additional registration fees may be a flat rate, or may vary based on your car’s age, value, or weight.


You know the saying—a new car loses value the moment it’s driven off the dealer’s lot. According to Carfax, new cars will lose more than half their value in their first five years.

When you have a car, you’re guaranteed to fork over money you weren’t planning to spend. Car ownership can be expensive, so you need to be prepared for two types of expenses:

The true emergencies

A maintenance issue or accident renders your car undrivable and now you can’t get to work or take your kids to school. Even if your car troubles are covered by insurance, you may have an expensive deductible to pay. Suddenly, you’re out a few hundred to over a thousand dollars!

Many people live in cities or towns without public transportation, so a working vehicle is a must for day-to-day life. Create an emergency fund to help get your car back on the road as quickly as possible. You can even have an emergency fund just for your car, and another emergency fund for things like home repairs or health issues.

The “life happens” stuff

Keep some money available for the non-emergency expenses that will eat into your savings: things like parking tickets and professional cleaning of spills on your cloth seats. Unlike emergencies, your car isn’t about to stop working, but you do need to pay up (especially for those parking tickets!).

Ways to save on common costs

You have quite a bit of control over your car-related expenses. Try shaving a few hundred dollars off your annual car budget by:

  • Refinancing your auto loan if you qualify for a lower interest rate
  • Adjusting your auto insurance policy to see if you can lower your premiums
  • Getting a second opinion when a mechanic tells you that you need an expensive repair
  • Limiting regular use of toll roads if another route is available and doesn’t add too much time to your commute
  • Parking and driving carefully to avoid expensive tickets
  • Looking into parking alternatives besides a private lot or garage—could you find less expensive parking a little further away from your office?

How much is it really?

Owning a car can often add up to $500-$1,000 a month in car-related expenses. According to NerdWallet, “for vehicles driven 15,000 miles per year, average ownership is $8,469 per year in 2017.” If you break that down monthly, it’s $705.

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