It now costs an average of $9,282 per year to own and operate a new vehicle, according to a recent AAA analysis.
That cost, which translates to $774 per month, is a new high, at least since AAA began tracking auto expenses in 1950.
If that amount sounds steep, it’s because it reflects every cost associated with owning and driving a new car for five years — from financing and insurance to gas and maintenance.
The biggest cost of all? Depreciation.
AAA found that if you buy a new car, depreciation will cost you $3,334 per year, on average — accounting for 36% of all costs associated with the car. That figure is based on the difference between the new-car purchase price and estimated trade-in value after five years and 75,000 miles.
Choosing your vehicle wisely
One way to lower your car ownership costs is to choose your vehicle wisely.
AAA found that the average cost to own and operate a new car varies widely by vehicle type.
Here’s the motor club federation’s breakdown of new-car ownership and use costs by vehicle type, assuming you drive 15,000 miles annually:
- Small sedan — $7,114 per year, on average
- Hybrid vehicle — $7,736
- Electric vehicle — $8,320
- Small SUV — $8,394
- Medium sedan — $8,643
- Minivan — $10,036
- Medium SUV — $10,265
- Large sedan — $10,403
- Pickup truck (half-ton with crew cab and four-wheel drive) — $10,839
So, choosing a truck over a small sedan — a classification that includes the Honda Civic and Toyota Corolla, for example — would mean you’ll pay an additional $3,725 in ownership and operating costs each year.
Now, here’s another way to knock thousands of dollars off your car ownership and use costs: Buy used.
After all, depreciation is the No. 1 reason that Money Talks News routinely advises that folks should always buy used vehicles.
As we note in “You Should Never Buy These 10 Things New“:
“The value of a new car drops like a rock as soon as you drive it off the lot. Rather than be upside down on your car loan five minutes after signing the paperwork, look for a quality used car that has already taken the huge depreciation hit.”
According to Edmunds, cars lose the greatest amount of their resale value in their first year. So, even buying a 1-year-old used car can save you thousands of dollars.
To further decrease your depreciation losses, hang on to your car as long as possible. Depreciation costs generally drop off over time.
Keeping your car in good working order and looking good will help minimize depreciation, helping it fetch a higher resale value when you sell it or trade it in.
For help with that, check out “7 Simple Ways to Keep Your Car Looking Like New.”
What’s your take on the cost of owning and operating a car these days? Sound off below or over on our Facebook page.