The average cost of a new or used car is currently around $47,000 and $33,000, respectively, and the calculations you’ll find below have been worked out on this basis.
Spoiler alert: the average monthly cost of owning a car comes in at $1,068 a month. While this may surprise you, budgeting for this amount should protect against nasty surprises.
Financing and Lease Payments
This is the big one: the monthly cost of financing or leasing your car. The actual cost will depend on several key factors, such as the amount of money you put down, the interest rate, and the amount of time your credit agreement is being stretched over. While it may be tempting to stretch these payments over as long a period as possible - to keep your monthly costs down - remember that doing so will add up to a significant amount in additional interest payments.
The average monthly cost of a vehicle finance or lease payment is $450, which represents almost half of the total monthly running costs of owning a car in 2024.
Fuel or Charging
With oil prices being so volatile right now, this is one monthly charge that can fluctuate significantly. However, you can expect to pay around $150 a month for fuel - this is based on driving a 30 mpg car 15,000 miles a year.
EV charging may lower costs in this regard, but there are other expenses to consider, such as installing a Level 2 home charger , which will set you back around $2,000.
Car Insurance
Car insurance is legally required, but having a policy is about more than staying on the right side of the law. Most policies will provide you with protection in the event of a collision or the theft of your vehicle, as well as offering indemnity against bodily injury and property damage.
It’s important to factor in the cost of car insurance when calculating the real-world cost of car ownership. The average cost of car insurance is $693 per year, which works out to $58 a month. There may be some things you can do to bring this figure down, however. For example, it’s a good idea to shop around for insurance providers who offer discounts and always maintain safe driving behavior. As well as keeping yourself and others safe, this can have a significant effect on your premiums.
Repairs and Maintenance
This monthly cost can vary widely; you may be lucky enough to have a car that runs for years without needing any repairs…or you may not be quite so fortunate and run up against a major breakdown and subsequent bill soon after purchase.
Keeping your car in good condition - and promptly getting any issues looked at - can help keep this cost down. When it comes to estimating a cost, budgeting around $250 a month is likely to be a good idea. As well as repairs, this sum can also cover routine maintenance charges such as tire balancing, car washes, oil changes, and filter replacements.
Taxes, Fees, and Other Charges
Don’t forget those taxes and fees when calculating the real monthly cost of owning a vehicle. While these vary from state to state, on average, you’ll pay $10 a month for registration fees and taxes. And how about parking charges? Again, this will depend on your lifestyle and state, but the average monthly cost of parking fees is $150.
How About Depreciation?
Depreciation may not be a monthly out-of-pocket expense, but it’s worth being aware of it, as it’ll kick in at the point you sell your vehicle . Depreciation is the decrease in the market value of your car over time - so it never applies to cars on a lease, as they are never the ‘owner’s’ to sell.
Taking into account the average cost of a car, depreciation is likely to be in the range of around $250 a month.
The Takeaway: Summing Up
It’s time to add everything up. Taking into account the average cost of finance or lease payments, fuel or charging, insurance, repairs and maintenance, and other expenses, you’re looking at a monthly cost of around $1,068 a month. This doesn’t include depreciation, which is not generally classed as an out-of-pocket expense.
While this is no doubt a significant sum to find every month, it’s important to remember that this takes into account all the monthly expenses that you’re likely to incur. In terms of the repairs and maintenance costs, you may well find that this expense is less than anticipated - but it’s best to err on the side of caution when working out your budget.
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