Average Cost of Owning a Car in 2026

Updated: February 2, 2026

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Owning a typical new car costs about $11,577 per year, or $965 per month, based on the latest full-year data available. MoneyGeek’s analysis shows drivers are paying less than they did at the 2023 peak, especially once you adjust for inflation.

In real terms, average ownership costs are about 8.2% lower than a year earlier and 10% lower than the 2023 high. Measured in today’s dollars, drivers now pay roughly 2.7% less than in 2020, even though the dollar amounts on their bills are more than 20% higher than before the pandemic. For broader trends in how many vehicles households keep and how that varies by metro and region, see MoneyGeek’s car ownership statistics analysis.

CAR OWNERSHIP COST HIGHLIGHTS

Current average: about $11,577 per year ($965 per month) for a new car driven 15,000 miles
Real costs: roughly 8.2% lower than last year and 10% below the 2023 peak after inflation
Insurance: premiums up about 18% since 2020 in dollars but about 5.4% lower in real terms
Vehicle choice: half-ton pickups cost about $6,400 more per year to own than small sedans
Affordability: car ownership now uses about 13.8% of median household income, down from 15.1% in 2023

Understanding Real vs. Nominal Costs

In this article, nominal cost means the dollar amount you actually pay, the numbers on your bills and bank statements. Real cost means that same amount adjusted for inflation to show what it’s worth in today’s purchasing power.

On paper, the average cost of owning a car climbed from $9,561 in 2020 to about $11,577 today, a roughly 21% nominal increase. When you convert 2020’s cost into today’s dollars using inflation data, that $9,561 equals roughly $11,894, which means the current cost level is about 2.7% lower in real terms.

If you’re also tracking what people pay upfront, MoneyGeek’s average price of a new car breakdown shows how sticker prices and income moved over the same period. MoneyGeek analyzed recent Your Driving Costs reports alongside Bureau of Labor Statistics inflation data to show how ownership costs shifted over the last five years and where drivers actually gained or lost ground.

Nominal vs. Inflation-Adjusted Car Ownership Costs (2020–2025)

When you adjust for inflation, average car ownership costs peaked in 2023 and fell about 10% by 2025, even though nominal costs remain more than 20% higher than in 2020.

What Changed Recently: Breaking Down the Relief

The headline 5.9% decline in nominal ownership costs hides a deeper 8.2% improvement in real terms. Inflation slowed to about 2.7% while car costs fell, so drivers gained more purchasing power than the surface numbers suggest.

Several categories did most of the work:

Depreciation decreased in real terms. Vehicles lost about $4,334 annually in the latest data. The year before, the nominal $4,680 loss equaled about $4,802 in today’s dollars, so real depreciation fell roughly 9.7% as new car prices stabilized and used car values strengthened.
Finance charges dropped. Borrowing costs eased from recent highs and the assumed loan rate in the ownership model fell year over year, cutting annual finance costs by about $200.
Fuel costs fell sharply. Average gas prices declined from about $3.99 per gallon to around $3.15, a 21% drop. Adjusted for inflation, the savings are even larger, which drivers see at the pump.
Insurance improved in real terms. Nominal insurance costs climbed to about $1,694, roughly 18% above 2020’s estimated $1,440, but in today’s dollars 2020 premiums were closer to $1,791, so current premiums are about 5.4% lower in real purchasing power.

Six major cost categories make up total car ownership expenses in the latest data.

Depreciation:

about $4,334 per year, 37% of total, the drop in value between purchase price and trade-in value after five years and 75,000 miles.

Insurance:

about $1,694 per year, 15% of total, full-coverage auto insurance, which varies widely by state and driver profile.

Fuel:

about $1,950 per year, 17% of total, based on 13 cents per mile and 15,000 annual miles.

Maintenance and repairs:

about $1,656 per year, 14% of total, including routine maintenance, repairs and one tire replacement set.

Finance charges:

about $1,131 per year, 10% of total, assuming a five-year loan with 15% down at average interest rates.

Registration, license and taxes:

about $813 per year, 7% of total, including sales tax, annual registration and licensing fees.

These averages assume 15,000 miles of driving per year in a new vehicle.

Car Ownership Cost Breakdown at a Glance

Use this table to see how each major line item contributes to your annual car budget. Depreciation, insurance and fuel take the largest share, while maintenance, financing and fees make up the rest of the $11,577 total.


Depreciation	$4,334	37%
Insurance	$1,694	15%
Fuel	$1,950	17%
Maintenance and repairs	$1,656	14%
Finance charges	$1,131	10%
Registration, license, tax	$813	7%
Total	$11,577	100%

Average Monthly Cost of Owning a Car

Car ownership costs break down to about $965 per month on average.

This monthly average assumes 15,000 miles per year and a financed new vehicle. Monthly figures are rounded and may not multiply exactly to annual totals. Actual monthly costs vary significantly by vehicle type: small sedans average about $698 per month, while half-ton pickups average about $1,232 per month.


Depreciation	$361	$4,334	37%
Insurance	$141	$1,694	15%
Fuel	$163	$1,950	17%
Maintenance	$138	$1,656	14%
Finance	$94	$1,131	10%
Registration, license, tax	$68	$813	7%
Total	$965	$11,577	100%

Real Cost Breakdown: Six Major Categories in Today’s Dollars

Each major cost category shows where savings emerged and where costs have simply stopped getting worse when you measure them in real purchasing power.

How each category changed since 2020, in real terms:

Depreciation: about $4,334 per year now vs. about $4,627 in 2020 (in today’s dollars), a 6.3% real decrease
Insurance: about $1,694 per year now vs. an estimated $1,791 in 2020 (in today’s dollars), a 5.4% real decrease
Finance charges: about $1,131 per year now vs. $1,306 in 2020 (in today’s dollars), a 13.4% real decrease
Fuel: 13 cents per mile now vs. about 19.2 cents per mile in 2020 (in today’s dollars), a 32.3% real decrease
Registration, license and taxes: about $813 per year now vs. $938 in 2020 (in today’s dollars), a 13.3% real decrease
Maintenance, repair and tires: 11.04 cents per mile now vs. about 11.8 cents per mile in 2020 (in today’s dollars), a 6.4% real decrease

Fuel, finance charges, registration and depreciation show the largest real improvements, while insurance and maintenance also fell but more modestly.

Depreciation is the largest component of ownership costs. The latest data shows an average annual depreciation cost of about $4,334, the drop in value between the purchase price and trade-in value after five years and 75,000 miles.

At its high point, depreciation was roughly $4,538 in nominal terms, which equals about $4,792 in today’s dollars. Today’s level is about 9.6% lower in real terms as new car prices leveled off and used car buyers regained confidence.

How to minimize depreciation

Buy gently used vehicles, ideally two to three years old, to avoid the steepest part of the depreciation curve. Choose brands with strong resale value, such as Toyota, Honda and Subaru, which often retain 60% or more of their value after five years.
Finance charges in this analysis assume a five-year loan with 15% down at average interest rates. The annual cost is about $1,131, roughly $201 lower than a year earlier as auto loan rates eased slightly.

In 2020, nominal finance charges were about $1,050, which equals roughly $1,306 in today’s dollars. That makes current finance costs about 13.4% lower in real terms.

How to minimize finance costs

Improving your credit score by at least 50 points before buying can save three to five percentage points on your interest rate. Shop multiple lenders, including credit unions, instead of accepting the first dealership offer. Larger down payments, such as 20% or more, reduce both your monthly payment and total interest paid.
Fuel is the most visible cost and delivered the largest real improvement. At 13 cents per mile, the average driver pays about $1,950 per year for fuel at 15,000 miles.

Average gas prices fell from about $3.99 per gallon to around $3.15, a 21% drop that drivers noticed quickly. In real terms, the improvement is even larger because inflation cooled at the same time.

Fuel cost by vehicle type
- Electric vehicles: lowest “fuel” cost, based on an average electricity price around 16.7 cents per kilowatt-hour
- Hybrids: second lowest, with many models achieving 50 miles per gallon or better
- Small sedans: moderate fuel use, often 30 to 35 miles per gallon combined
- SUVs and trucks: highest fuel costs, often 15 to 22 miles per gallon depending on size and configuration
How to minimize fuel costs

Choosing a more efficient vehicle is the biggest lever. Every five-mile-per-gallon improvement saves about $200 per year at 15,000 miles. Keeping tires properly inflated can improve fuel economy by around 3%, and avoiding aggressive acceleration and hard braking can cut fuel use by 15% to 30%.
Insurance costs vary widely by location, vehicle and driver profile. In this ownership model, full coverage averages about $1,694 per year.

Nominal insurance costs have risen roughly 18% since 2020, when premiums were around $1,440. Adjusted to today’s dollars, 2020 premiums equal about $1,791, so current costs are roughly 5.4% lower in real terms.

Real premiums peaked in 2023 at about $1,864 in today’s dollars and have fallen about 9.1% since then. The real affordability shock hit in 2023, when inflation-adjusted insurance costs jumped about 5.5% in a single year.

How to minimize insurance costs
- Shop at least three insurers every year; many drivers can save $500 to $1,000 by switching
- Raise comprehensive and collision deductibles to $1,000 or $1,500 to cut premiums by 15% to 30%
- Bundle your auto policy with home or renters insurance to save another 15% to 25% in many markets
Government fees vary by state and vehicle value. The average of about $813 per year includes sales tax at purchase plus annual registration and licensing fees.

In 2020, these fees averaged about $754 in nominal terms, which equals roughly $938 in today’s dollars. That makes current fees about 13% lower in real terms as many fee schedules haven’t fully kept pace with inflation.

Registration costs range from under $50 per year in some states to more than $500 in others. Some states also charge annual vehicle property taxes that can add $200 to $600 per year to ownership costs.
This category covers scheduled maintenance, repairs and one replacement set of tires over five years. At 11.04 cents per mile, the average driver spends about $1,656 per year at 15,000 miles.

Maintenance costs have declined about 6% in real terms since 2020 as parts prices stabilized and some labor rates grew more slowly than overall inflation.

Typical annual maintenance costs by vehicle type
- Electric vehicles: about $1,218 per year, lowest among major categories
- Small sedans: about $1,236 per year
- Hybrids: about $1,332 per year
- Compact SUVs: about $1,440 per year
- Medium sedans: about $1,628 per year
- Pickup trucks: about $1,896 to $2,124 per year, highest range
How to minimize maintenance costs

Follow the manufacturer’s maintenance schedule to prevent small issues from becoming expensive failures. Use trusted independent mechanics where possible, since they often charge 30% to 40% less than dealerships for routine work.

Vehicle Choice Creates a $6,400 Annual Cost Spread

Vehicle choice is the largest controllable driver of ownership costs. The gap between the cheapest and most expensive categories exceeds what many households spend on groceries in a year.

Half-ton pickup trucks cost about $6,400 more per year to own than small sedans, or roughly $533 more per month. Over a 12-year ownership period, that difference adds up to around $76,800 in extra costs.

Small sedans at about $8,381 per year remain the most economical choice. Models like the Honda Civic, Toyota Corolla and Mazda3 combine relatively low ownership costs with strong reliability and solid resale value.

If you’re comparing specific models, pair these ownership costs with MoneyGeek’s best car insurance companies guide to understand how insurance quotes change from a sedan to a truck.

2025 Ownership Costs by Vehicle Category (15,000 Miles)


Small sedan	55.87¢	$8,381	$698	baseline
Hybrid	63.94¢	$9,591	$799	+$1,210
Compact SUV	68.53¢	$10,280	$857	+$1,899
Electric vehicle	71.21¢	$10,682	$890	+$2,301
Medium SUV	83.89¢	$12,584	$1,049	+$4,203
Half-ton pickup	98.54¢	$14,781	$1,232	+$6,400

Electric Vehicle Costs Fell Sharply, Now Competitive With Gas SUVs

Electric vehicles saw the largest cost improvement of any category. After ranking as the most expensive vehicles to own at 84.69 cents per mile, average EV ownership costs fell 16% to about 71.21 cents per mile.

Several trends drove that improvement:

Depreciation stabilized as the used EV market matured and buyers trusted eight to ten-year battery warranties
Maintenance remained the lowest of any vehicle type at about $1,218 per year, with no oil changes and fewer brake replacements thanks to regenerative braking
Charging costs rose only modestly as average residential electricity prices increased from about 15.9 cents to 16.7 cents per kilowatt-hour; at roughly 3.5 miles per kilowatt-hour, EV drivers pay about 4.8 cents per mile for energy compared with 13 cents per mile for gas vehicles
Purchase prices normalized as federal incentives of up to $7,500 for many models combined with manufacturer price cuts

At about $10,682 per year, EVs cost roughly $2,301 more than small sedans and $402 more than compact SUVs, but about $1,899 less than medium SUVs. For drivers who can charge at home, drive at least 15,000 miles per year and plan to keep the vehicle for at least five years, EVs can reach cost parity with comparable gas SUVs within three to five years.

The Affordability Reality: Real Income vs. Real Costs

Car ownership costs are only one side of the equation. Affordability depends on how those costs compare to real household income.

Median Income vs. Car Ownership (Real Analysis, 2020–2025)

Car ownership consumed about 15.1% of income at the 2023 peak. The decline to about 13.8% frees roughly 1.3 percentage points of income, or about $1,088 per year, for the median household.

MoneyGeek uses the latest Census income data available, which covers 2023 to 2024 incomes, to approximate current income because official 2025 figures aren’t yet published


2020	$84,016	$11,894	1.70	14.2%
2021	$84,091	$11,483	1.64	13.7%
2022	$82,038	$11,801	1.73	14.4%
2023	$85,125	$12,871	1.81	15.1%
2024	$84,859	$12,617	1.78	14.9%
2025	$83,730 (estimated)	$11,577 (nominal)	1.66	13.8%

The 20/4/10 Rule Reality Check

Many personal finance experts recommend the 20/4/10 rule: make a 20% down payment, use a loan term of four years or less and keep your total vehicle expenses, payment plus insurance plus fuel, under 10% of gross monthly income.

For a household with an annual income around $83,730:

10% monthly maximum: about $698
Average new car payment in late 2025: about $749
Add insurance (about $141 per month) and fuel (about $163 per month): roughly $1,053 total

That $1,053 total is about 51% above the recommended 20/4/10 target for a median-income household.

The 20/4/10 rule works better for households earning around $120,000 or more. Median earners can get closer by buying three to five-year-old used vehicles, choosing smaller vehicles, such as a compact SUV instead of a full-size truck, and making larger down payments.

The Real Cost Journey (2020–2025)

Looking at inflation-adjusted costs shows when ownership actually became more or less affordable, instead of just tracking price tags.


2020	$9,561	$11,894	baseline	baseline	Pandemic suppressed driving and demand.
2021	$9,666	$11,483	+1.1%	−3.5%	Supply chains were strained, but real costs fell.
2022	$10,728	$11,801	+12.2%	+2.8%	Inflation surged and real ownership costs rose.
2023	$12,182	$12,871	+27.4%	+9.0%	Real costs spiked and created an affordability problem.
2024	$12,297	$12,617	+0.9%	−1.9%	Nominal costs reached a high point, but real costs began to ease.
2025	$11,577	$11,577	−5.9%	−8.2%	Relief in both real and nominal terms.

EXPERT INSIGHT: MANAGING CAR OWNERSHIP COSTS

Mike Baldicana, Web Content Specialist at Kostex Garage Repair

Calculate what you'll actually spend before signing papers. Your monthly payment is just the start, insurance, maintenance and gas costs add thousands annually.

Don't assume the dealership where you bought the car offers the best service prices. Shop around for oil changes and routine maintenance. You'll often find better rates at independent mechanics.

SMART MOVES FOR 2026

The recent cost decline and moderating inflation create a better backdrop for car decisions in 2026.

Evaluate total costs, not just the payment. A $35,000 vehicle at 6% APR costs about $42,000 over 60 months, including roughly $7,000 in interest, before you add depreciation, insurance and fuel.
Choose vehicle size carefully. The $6,400 annual premium for half-ton pickups compared with small sedans equals about $533 per month, similar to a second car payment. Choose size based on how you drive most of the time, not occasional heavy-duty use.
Run real math on EVs. The $2,301 annual premium over small sedans shrinks with home charging, higher annual mileage and federal tax credits worth up to $7,500 for many models. Compare five-year total ownership costs before deciding.
Keep vehicles longer. With real costs down roughly 10% from the 2023 peak, investing $1,500 to $2,000 per year in maintenance on a paid-off car often beats spending $10,000 or more per year on a new one.
Budget in real terms. Aim to keep total transportation costs, car payment, insurance, fuel, maintenance and registration, around 14% of gross income. That target lets a typical household cover median transportation costs with some buffer for unexpected repairs.

FAQ: Average Car Ownership Costs

Car ownership costs more than your monthly payment. Common questions about total expenses:

What is the average monthly cost of owning a car right now?

The latest data shows that owning a typical new car costs about $965 per month, or $11,577 per year. That figure includes depreciation, insurance, fuel, maintenance, registration and finance charges. Small sedans average about $698 per month, while half-ton pickups average about $1,232 per month.

How much have car ownership costs increased since 2020?

Nominal costs increased about 21% from $9,561 in 2020 to $11,577 in the latest full year. After adjusting for inflation to today’s dollars, real costs declined about 2.7% because the 2020 cost equals roughly $11,894 in current purchasing power.

Why did car ownership costs drop recently?

Three factors drove the decline: gas prices fell about 21%, depreciation decreased as new car prices stabilized in real terms and finance charges dropped by about $201. Together they reduced nominal costs by 5.9% and real costs by about 8.2%, the largest real improvement since 2020.

What is the most expensive part of owning a car?

Depreciation is the largest cost at about $4,334 per year, roughly 37% of the total. Insurance often creates more budget stress because it requires cash every month, while depreciation remains invisible until you sell or trade in the vehicle. Insurance costs also vary widely by state, vehicle and driver profile.

How do electric vehicles compare in total ownership costs?

Electric vehicles cost about 71.21 cents per mile in the latest data, equal to about $10,682 per year at 15,000 miles. That’s roughly $2,301 more than small sedans and $402 more than compact SUVs but about $1,899 less than medium SUVs. EVs have the lowest maintenance and energy costs, and with federal tax credits many drivers reach cost parity with comparable gas vehicles within three to five years.

About Myryah Irby

Myryah Irby is a writer and data journalist with a master's degree in creative writing from the University of San Francisco. She analyzes insurance, housing and personal finance data for readers making major financial decisions. Her writing and interviews have appeared in The New York Times and The San Francisco Chronicle.

Irby has managed home improvement and insurance website portfolios for more than a decade. She breaks down complex insurance and finance topics into clear, actionable guidance.

Read Full Bio »

sources

American Automobile Association. "Your Driving Costs 2025: How Much Does it Really Cost to Own a New Car?." Accessed February 2, 2026.
American Automobile Association. "Your Driving Costs 2024." Accessed February 2, 2026.
U.S. Bureau of Labor Statistics. "Consumer Price Index for All Urban Consumers (CPI-U): U.S. City Average, Historical Tables." Accessed February 2, 2026.
U.S. Census Bureau. "Income in the United States: 2024." Accessed February 2, 2026.
Federal Reserve Bank of St. Louis. "Consumer Price Index for All Urban Consumers: All Items (CPIAUCSL)." Accessed February 2, 2026.
Experian. "State of the Automotive Finance Market Report, Q3 2025." Accessed February 2, 2026.