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Key Takeaways
- Owning a car involves costs beyond purchase, including insurance, gas, and maintenance.
- The average annual cost of owning a car in 2025 was about $11,577, according to AAA.
- Utilizing public transport or carpooling can significantly reduce transportation costs.
- Driving smaller, fuel-efficient cars can save money on gas and maintenance.
- Regular maintenance prevents expensive repairs and helps manage car expenses effectively.
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The various costs associated with car ownership include purchase, maintenance, insurance, and fuel. Understanding these costs helps you make financially informed decisions. Few of us know exactly how much it really costs to own a car, so factor in these expenses, or else you might underestimate how expensive owning a car can be. The latest statistics put the cost of owning a new car at $52,183 and operating it at $11,577 a year.
To avoid or reduce car ownership costs, there are options like public transportation or carpooling. Let’s look at more.
Car Ownership Costs: Government Data Insights
According to the U.S. Bureau of Labor Statistics (latest data), prices for new vehicles went up slightly in 2023 by 3.5%, while used vehicle prices dropped by 7.1%. In 2025, however, both new and used car prices increased. The average price of a used car was $26,043, and the average price of a new car was $52,183.
According to Consumer Expenditures by the Bureau of Labor Statistics, in 2024, the average vehicle cost $13,947 per year to own and operate. The breakdown of the figure comes to $5,337 for purchasing the vehicle, $2,411 in gasoline and motor oil expenses, $1,993 in vehicle insurance, and $4,206 in other vehicle-related costs. Other sources put the cost of a new car at $11,577 a year.
American Automobile Association: Car Cost Statistics
The American Automobile Association (AAA) also compiles statistics on the cost of driving and has been doing so since 1950. Its 2025 “Your Driving Costs” survey summarizes the cost of gasoline, maintenance, insurance, license and registration, loan finance charges, and depreciation across the five top-selling models in each of the nine vehicle categories.
| AAA Total Cost Per Year | |||
|---|---|---|---|
| 2025 Model | 10,000 Miles per Year | 15,000 Miles per Year | 20,000 Miles per Year |
| Small Sedan | $7,024 | $8,380 | $9,790 |
| Medium Sedan | $8,450 | $9,956 | $11,519 |
| Subcompact SUV | $8,419 | $9,917 | $11,472 |
| Compact SUV (FWD) | $8,760 | $10,279 | $11,859 |
| Medium SUV (4WD) | $10,876 | $12,584 | $14,355 |
According to AAA, in 2025, the average person spent $11,577 per year for the privilege of driving. These numbers also don’t include the cost of parking.
Important
If you don’t drive much, leasing a vehicle may be right for you to help minimize overall costs. Weigh your options and shop around different dealerships to get the best quote and potentially be able to negotiate.
Tips to Reduce Your Car Ownership Expenses
Regardless of how much you spend on your car each year, less is always better. Although eliminating all spending on transportation isn’t practical or possible for most people, some steps can be taken to keep your costs low.
If you can get to your destination with public transportation, you should seriously consider its merits. Not only does somebody else do the driving, but taking public transportation can also often reduce your monthly transportation expenditures by a significant amount. Buses, trains, subways, and vanpools can all provide relatively inexpensive alternatives to driving yourself to work, and you don’t have to pay for their maintenance.
Carpools are another great option. Just because you own a car doesn’t mean you always need to drive it. Taking turns with a friend can save you money on the average gas cost per year and help avoid wear and tear on your vehicle.
If you work odd shifts or can’t access public transportation, you might have no choice but to own and use your vehicle. If that’s the case, think small. Driving a small sedan can cost 20.13 cents per mile vs. 26.44 cents for a gas-guzzling SUV. It’s also a good move for the environment and, since you have to breathe the air, a good move for your health.
Similarly, don’t pay for an eight-cylinder engine when four cylinders will work just fine. Unless you’re hauling heavy loads on a routine basis, the extra cost of a bigger engine results in more money spent on gasoline.
Whatever you are driving, make a conscious effort to drive it less frequently. Walking or biking to local destinations is good for your health and good for your budget. When you do drive, consolidate your trips. Go to the shopping center, the bank, and the dry cleaner all in the same trip instead of making three separate trips.
What Goes Into the Cost of Owning a Car?
The cost of owning a car goes far beyond the price of the car. It also includes interest payments on the loan you take out for the car, gas costs, insurance costs, legal document fees, maintenance costs, and repair costs.
How Can You Reduce the Cost of Owning a Car?
To reduce the cost of owning a car, you can start with the car itself. Buying smaller cars will allow you to save money on gas right away. From there, constantly check for the best insurance rates and make sure you’re getting the best deal you can. You can also drive less if possible; this could include carpooling to work, doing errands in one go rather than multiple trips, and using public transport when possible. Additionally, if you are consistent with the maintenance of your car, it could save you big repair costs in the future.
Is It Cheaper Not to Own a Car?
Yes, it is cheaper not to own a car. You will save money on the cost of a car, interest if there were a loan involved, gas, insurance, and maintenance. That being said, it depends on the specific situation. If you need a car to get to work, it may be more convenient to own a car rather than take public transport if the public transport is not timely or easy.
The Bottom Line
No matter how you get from place to place, pay attention to your spending. This includes car costs, which range from the purchase to gas, insurance, and maintenance.
Cost-saving strategies include buying a smaller car, going with a smaller engine, and consolidating your trips. Other options include carpooling, walking or biking, and using public transport.
