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What’s the Real Cost of Owning a Car

How to calculuate the total cost of car ownership.

Do you know the real cost of owning a car?

We often think the cost of the car is the price we pay the dealership. The cost, however, is far more than the price tag of the vehicle. Consider these costs before buying your next car.

There are on-going costs associated with car ownership that should be considered which are carrying costs and ownership costs. Carrying costs relate to the purchase of the car while ownership costs relates to maintenance and many other variables such as fuel costs.

So what is the real cost of owning a car? 

Based on AAA, the average annual cost of new vehicle ownership climbed to $9,282, or $773.50 a month.

Financing Costs

Financing is often what we associate with the cost of owning a car. However, the total financing amount you pay will vary depending upon the size of your down payment, the length of your loan, and your actual credit standing. Know your credit score can help you shop for the best rate.

Other financing costs to consider is GAP policies or extended warranties that may be added to the total purchase price.

Want to lower your financing? Consider refinancing your car to a lower rate.


Most won’t think about depreciation as a real cost but your car does decrease in value which affects the total cost of ownership. It’s said that cars lose value immediately after it leaves the lot. Basically, you can’t sell it for the amount you paid just 5 minutes after driving off the lot.

To get an idea of the value of your car, look for the resale on Kelly Blue Book and compare how much you’ve paid. You can do this each year.


The cost of insurance depends on a variety of factor such as age, driver history, location, and type of vehicle. Business Insider has analyzed auto insurance across the US to determine the average policy is around $1550 per year.

You can save on insurance by shopping around for better rates. There may be factors that can lower your rates and the first step is asking your current provider. Then, shop online and compare.

Registration and DMV Fees

The annual registration and DMV fees vary by state. Some states require you to pay an excise tax on the depreciated value each year. And other states just require a small annual registration fee.


Based on AAA, the average maintenance for late model cars is $913.50 (oil changes, tires, etc). Again, how much you pay depends on how and where you drive and the age and model of the car. A well kept vehicle can help lower maintenance costs. Newer vehicles often come with warranties to offset cost of maintenance.


Depending on how much you drive and the going rate of gasoline, your fuel costs can vary greatly. To lower fuel costs, there are some things you can do such as keeping your tires properly inflated. GetUpside is a cashback app helping drivers get money back from gas purchase.

Other variable expenses to consider when calculating the real cost of owning a car include parking costs, tolls, and moving violation tickets.

Jason Vitug

Jason Vitug is a bestselling author, entrepreneur, and founder of and His purpose to help others live their best lives through experiential and purposeful living. Jason is also a certified yoga teacher and breathwork specialist and has traveled to over 40 countries.

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