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.
