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The True Yearly Cost of Owning a Car

By the Money Years editors · October 28, 2026

Ask most people what their car costs and they will mention the monthly payment and gas. Those are the costs you notice, but they are only part of the bill. Depreciation, insurance, maintenance, interest and registration add up to far more, and together they make a car one of the biggest expenses in most household budgets after housing.

What AAA’s 2026 study found

AAA’s yearly Your Driving Costs study estimates that owning and running a new vehicle costs about $12,863 a year in 2026, or roughly $1,072 a month, based on 15,000 miles a year and keeping the car for five years. AAA changed its method this year and added more electric and hybrid models, so it warns against comparing the figure directly with earlier years.

Here is roughly where that money goes:

Costs vary a lot by type. AAA puts a small sedan at about $9,259 a year and a half-ton pickup at about $16,449.

Depreciation: the cost you never see

Depreciation is the biggest single cost and the easiest to forget, because no bill arrives for it. A new car typically loses a large share of its value in the first few years. You only feel it when you sell or trade in, and find the car is worth much less than you paid. Spread over the years you own it, that loss is a real cost, and it is why buying a car that is a few years old is one of the most reliable ways to save money.

Working out your own figure

Your own costs may be quite different from the national average. The car cost calculator adds up the price you paid minus what you expect to sell for, divided by the years you keep it, plus fuel, insurance, maintenance, loan interest and fees.

For example, a $32,000 car sold for $14,000 after six years loses about $3,000 a year. Add 12,000 miles of fuel at 30 miles per gallon and $3.40 a gallon, about $1,360; $1,900 of insurance; $900 of maintenance; $1,000 of loan interest; and $600 of registration and parking, and the total comes to about $8,760 a year, or $730 a month. That is less than the AAA average because of the lower mileage and cheaper car, but still far more than the loan payment alone.

Ways to cut the cost

Keeping a car longer is the single biggest saving, because depreciation slows sharply after the first few years. Buying used, choosing a car with good reliability and fuel economy, and shopping for insurance every year or two all help too. A shorter loan or a larger down payment cuts finance charges, and the car loan payoff calculator shows what extra payments save.

For some households the biggest saving is going down to one car, or none. If public transport, cycling and the occasional ride-share or rental cover your needs, the money saved can be large. The commute cost calculator compares driving with other options for your daily trip.

What it means long term

Car costs add up over a lifetime. Spending around $9,000 to $13,000 a year on driving for 40 years is several hundred thousand dollars, and invested instead it would be far more. That is not a reason to give up a car you need, but it is a strong reason to choose carefully, keep it for a long time and count the whole cost, not just the payment.

The bottom line

The true cost of owning a new car is about $12,900 a year on AAA’s 2026 figures, led by depreciation, fuel and insurance. Used cars driven fewer miles cost less, but almost every car costs well more than its monthly payment. These figures are averages and estimates; your own costs depend on the car, where you live and how much you drive.

This guide is general information for planning, not personal financial advice. Figures were checked on the date shown and can change.