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What is the true cost of owning a new car?

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A common tactic used by car salespeople is to ask a customer, “How much do you want to spend on your monthly payment?” That maneuver often gets potential customers to shift their focus away from the total purchase price.

In similar fashion, when considering the total cost of owning a vehicle, focusing solely on monthly payments or the purchase price is misleading. Car owners also need to factor in depreciation, fuel, finance charges, insurance, license/registration fees and taxes, and maintenance and repair costs.

 Every year since 1950, AAA has published Your Driving Costs, which breaks down the annual cost of owning a new car, based upon driving 15,000 miles a year for five years. AAA calculates ownership costs based on the six factors mentioned above for the five top-selling models in nine vehicle segments. The costs are then combined and averaged to determine the overall cost of owning a new car.

For 2020, the average price of a new car was $31,401, and the average annual cost to own a new car was $9,561—that’s $279 higher than in 2019. The increase results from increases in the average cost of depreciation, insurance, license/registration fees and taxes, and maintenance and repairs. Only the costs of fuel and finance charges decreased. 

The table below breaks down average costs in 2020 by category.



Change Over 2019


$3,721 loss
in value/year

Up 12 percent



Down 11 percent


11 cents/mile

Down 8 percent



Up 0.6 percent

License registration, taxes


Up 13 percent

Maintenance and repair

9 cents/mile

Up 4 percent


Depreciation costs increased because of a higher average purchase price for small sedans, large sedans, and electric vehicles. However, the average interest rate on new car loans was nearly 1 percent lower than in 2019. Gas prices dropped because of increased supply and decreased demand related to COVID-19. The slight increase in insurance costs is due to a normal market fluctuation. Higher license and registration fees and taxes are due to an increase in the average sales tax rate and an average higher vehicle purchase price. And an increase in the national labor rate is responsible for an increase in maintenance and repair costs.

The following table breaks down the average per/mile costs by vehicle category, in ascending order.


Cost per mile


Small sedan

50.10 cents

Lower overall driving costs


54.32 cents

Second least-expensive car to drive

Small SUV

55.75 cents

Least-expensive vehicle category to insure

Medium sedan

58.23 cents

Overall costs fall in the middle of the pack


60.79 cents

Lowest maintenance, repair, and tire costs

Medium SUV

66.91 cents

Highest maintenance, repair, and tire costs


67.34 cents

Second-least-expensive category to insure

Large sedan

74.55 cents

Second most-expensive car to drive


75.39 cents

Highest overall driving costs


Download the Your Driving Costs 2020 brochure, which includes a formula to help you calculate the driving costs for your vehicle.

John Lehrer has been a car guy ever since he bought his first sports car, a Porsche 356 C cabriolet. He is the automotive editor for Westways magazine and the author of the 2021 AAA Car Guide

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