Your car may be essential to your daily routine, but that doesn’t mean you’re not spending money on it. On average, Americans spend more than $5,000 per year on their vehicles, making car ownership statistics an important consideration before you buy or lease your next vehicle.
Maintenance costs vary depending on how often you have your vehicle serviced; it will cost less if you choose to do your own maintenance. However, if you take your car in for service every 3,000 miles or so, most mechanics charge around $75 per visit. After you tally up fuel and insurance, maintenance costs make up about a third of your annual car ownership expenses. Thankfully, there are plenty of ways to reduce these costs (and some will save you money from day one).
There are a number of fees associated with car ownership, from registration and licensing to documentation fees. These expenses can add up quickly, especially for people who live in cities where tolls and congestion charges can top $1,000 annually. You will also need tires and regular maintenance as you use your car for its intended purpose—the EPA estimates that gas is necessary for around one out of every four miles driven. And then there’s depreciation—the amount that your car loses in value while it sits in your driveway.
Of course, purchasing a new car isn’t exactly free. For example, you’ll need to consider your down payment and how much you’ll be paying in interest if you finance your purchase. Additionally, you’ll need to factor in taxes and fees as well as things like registration renewal (required every year), car insurance rates, maintenance costs, and gas prices when determining whether or not it makes financial sense for you to buy or lease a vehicle.
Auto insurance is a legal requirement in most states. The average yearly insurance cost for a newly purchased car is $1,592. These costs can vary greatly depending on your age, location, and driving record. Insurance rates depend on risk factors, including where you live, what kind of car you drive, and how much coverage you buy.
The amount of money you’ll spend on fuel depends largely on your car. A fuel-efficient vehicle, such as a hybrid or electric, will cost you less at each gas pump. In 2021, drivers spent an average of $1,837 per year on gas (as reported by AAA), although costs vary wildly depending on where you live.
Also, a little congestion could end up costing you a lot. If you find yourself driving 20 minutes to get to work and back each day, spending a fraction of that time in traffic each day can lead to unnecessary expenses (up to $1200 per year in wasted fuel).
Typically, we only consider how much a car costs when buying it. It’s easy to overlook what a vehicle really costs, though. Vehicles depreciate rapidly in their first few years on the road and typically lose nearly half their value in just three years. This means that a car you bought for $30,000 three years ago is now worth around $15,000.
According to the experts at Lantern Credit, “How people feel about driving — and their interpretations of others’ driving abilities — varies by generation.” That’s why it’s important to take a realistic look at statistics relating to car ownership before making a final decision on what kind of vehicle will best suit your individual needs.