Navigating the Expenses of Vehicle Ownership

Annual Costs of Owning a New Car

According to AAA, owning and operating a new car costs around $12,300 annually. This figure includes expenses such as fuel, maintenance, repair, tires, insurance, license, registration, and taxes. Depreciation and loan interest are the two most significant expenses, and they increase in line with the rising costs of manufacturers' suggested retail prices (MSRPs). In 2024, the average sales-weighted new vehicle MSRP is $38,883, up 0.7% from 2023. Depreciation costs car owners $4,680 annually on average, while the average annual finance charge increased by 6% to $1,332. New- and used-vehicle loan terms average 68.48 and 67.41 months, respectively, resulting in average monthly payments of $734 for new cars and $525 for used cars.

When comparing repair costs across manufacturers, Porsche ($1,192), Land Rover ($1,174), and Jaguar ($1,123) are the most expensive to repair annually. On the other hand, Oldsmobile repairs only cost an average of $311 per year. Hybrids rank second for the lowest car ownership costs, while electric vehicles (EVs) have the second-highest average total ownership costs. Pick-up trucks cost the most per mile at $1.10, while medium sedans and compact SUVs cost the least at 70 cents and 71 cents per mile, respectively.

The Most Common Car Repairs and Maintenance Tasks

The most common car repairs and replacements range from $164 to $193 for an alignment and $1,103 to $1,212 for a fuel pump replacement. Kelley Blue Book breaks down these common costs as follows:

Fuel pump replacement: $1,093–$1,212Fuel injector replacement: $1,103–$1,226Power steering pump replacement: $837–$936Alternator replacement: $747–$842Starter replacement: $728–$820Thermostat replacement: $661–$747Brake pad and rotor replacement: $533–$612Mass air flow sensor replacement: $452–$524Spark plug replacement: $356–$417Evaporative emissions (EVAP) purge control valve replacement: $323–$380Tire pressure monitoring sensor replacement: $314–$368Alignment: $164–$193

Final costs vary depending on the replacement materials chosen and whether the work is done by a professional or DIY. For example, Honda's "No Start" due to ignition switch failure is one of its top three most prevalent problems, with repair costs ranging from $148 to $193 in parts and labor or $74 to $100 if done by the owner.

Unexpected Car Repairs

Despite preventive maintenance efforts, unexpected car repairs can still occur. This can include losing or breaking a smart key, a headlight burning out, or spilling a drink on the car's digital display. More serious and expensive unanticipated repairs include replacing a body panel or a plug-in hybrid battery. The National Motorists Association suggests reviewing emergency funds, financing options, and mechanical aptitude to decide how to cover unexpected car repairs. Establishing a rainy-day fund can help offset costs, and if the emergency savings are depleted, exploring financing or payment plans is an alternative. DIY work can also save money, but it requires knowledge and skills.

Maintenance and Car Repair Costs over Time

In one decade, the Consumer Price Index (CPI) for All Urban Consumers specific to Motor Vehicle Maintenance and Repair rose from 268.9 (January 2015) to 396 (January 2024), representing a 47.3% increase. Compared to 2015, the average cost of car ownership in 2024 reflects increased maintenance and repair expenses. In 2015, the average cost to own and operate a car was $8,698, which is $3,599 less than in 2024. Adjusted for inflation, the 2015 average is about $800 less than the 2024 average. Depreciation ($3,654), fuel ($1,681.50), and insurance ($1,115) were the three highest expenses in 2015, while car maintenance cost an average of $766.50.

Auto Warranties vs. Auto Insurance

Auto insurance and auto warranties have different coverage applications, terms, and limitations. Auto insurance kicks in when an event covered by the policy occurs, such as a car accident. Auto warranties, on the other hand, pay for repairing or replacing components due to recalls, defects, or normal wear and tear. Drivers are not required by law to obtain a car warranty, but manufacturers often offer factory warranty coverage for up to three years. Extended warranties are also available from manufacturers, dealerships, and third-party vendors and offer additional coverage. Auto warranties and auto insurance exclude routine maintenance tasks.

Auto insurance typically renews every six to 12 months and includes coverage types such as bodily injury, property damage, comprehensive, and collision. These coverages pay for costs associated with a car accident or damage to the parked vehicle, up to the limits of the premium. Auto insurance also pays to repair or replace the vehicle if it is stolen.

How to Choose a Car Warranty

Factory or manufacturer's warranties are available for new cars, while extended warranties are for used cars after the factory warranty expires. When choosing a car warranty, consider the following tips:

Align warranty coverage options with the components or repair costs you're most concerned about. Focus on powertrain warranties if you want coverage for a new engine or transmission.Compare quotes across warranty providers to ensure the best value, paying attention to term and mileage limits.When requesting quotes and interacting with warranty service providers, notice their customer service and how easy it is to get information.Be cautious of non-legitimate extended warranty providers. Read customer reviews and the company's Better Business Bureau (BBB) profile before adding a warranty to your shortlist.

How to Choose a Car Insurance Policy

First-time car insurance buyers may be shocked by the premiums. Providers consider factors such as age, gender, driving record, and credit score. The car's make and model, as well as the selected coverage limits and deductibles, also impact the cost. When comparing quotes, consider the minimum required auto insurance set by the state government. If the car is financed, the lender may require additional coverage. Tailor coverage to the vehicle's age and condition and explore available discounts such as military, student, and good driver discounts.

How to Save Money on Repairs

Saving money on repairs can reduce annual car repair and maintenance costs. If you're mechanically inclined, doing your own repairs avoids labor costs. Connecting with other owners of the same vehicle can also enhance your knowledge of required repairs. Preventive maintenance is crucial for keeping the car on the road longer and includes tasks such as maintaining fluid levels, swapping air filters, replacing wiper blades, inspecting and replacing brake pads and rotors, and checking tire pressure and tread wear.

Infrequent car maintenance tasks include replacing drive belts, spark plugs, water pumps, and timing chains/belts. Test the battery and replace it if it no longer holds a charge. Schedule an alignment annually to ensure the longevity of the vehicle's suspension components.

Finding a Trustworthy Mechanic

When looking for a local mechanic, look for shops with Automotive Service Excellence (ASE)-certified technicians. The National Institute for Automotive Service Excellence vets technicians and certifies them as certified master automobile technicians. Review other recognitions and awards a repair shop has received and consider the guarantees they offer on their work.

Staying Informed about Car Repair Costs

Obtaining detailed repair cost quotes from a trusted mechanic can help you understand how repair fees are broken down into parts and labor costs. RepairPal certifies local shops nationwide to connect car owners with trustworthy experts. Look up your make and model to learn about common repairs and issues. Community discussions on social media, Reddit, and online forums can also provide valuable insights.

Learning Which Repairs and Maintenance Tasks to DIY

Completing auto repairs and upkeep DIY can save money and time. DIY tasks such as battery swap, brake pad and rotor replacement, air filter change, coolant exchange, drive belt replacement, oil change, and windshield wiper blade replacement are relatively easy and can be done in the comfort of your own garage. However, balance cost savings with your confidence in completing the job successfully. If you're not comfortable, it's better to pay a professional to avoid additional repairs and higher bills.

What's Next?

The $12,297 Americans spend annually on vehicle ownership includes various expenses. By purchasing auto warranty coverage, finding a trustworthy mechanic, researching common repairs, and doing some maintenance DIY, car owners can offset repair and maintenance costs. These practices help build responsible car ownership habits and prepare for future vehicle purchases.