Expenses Associated with Owning a Car

It’s always a good idea to review your budget to see what you can comfortably afford before shopping for a new car. While you’re doing so, keep in mind a loan is just one of the expenses associated with owning a car.

“Determining the cost of a new car is more than calculating a monthly payment,” cautions John Nielsen, the American Automobile Association’s (AAA’s) managing director of Automotive Engineering and Repair. “While sales price is certainly a factor, maintenance, repair and fuel costs should be equally important considerations for anyone in the market for a new vehicle.”

With that said, let’s take a look at them.

Fuel Costs

You’ll have to feed it, when it needs it. How often will vary depending upon how much you drive.

The best way to calculate fuel expense is to figure out how many miles you’ll drive back and forth to work every day — let’s put it at 30 miles. Now factor in another 50 miles for weekend errands and pleasure driving. This puts you at 150 miles each week.

Next, look at the average fuel economy you car will return — let’s put that at 30 miles per gallon. This means you’ll use five gallons of fuel per week. If fuel prices average $3 per gallon where you live, you’re looking at $60 monthly for fuel — within these parameters.

Of course, your exact results will vary depending upon your situation.


Laws in every state except New Hampshire and Virginia require you to have auto insurance. However, operating a car without insurance is like playing Russian roulette with your finances, wherever you live. Eventually, the loaded cylinder will come around.

Insurance costs vary based upon gender, age, driving record, residential ZIP code, how far you commute to work and the nature of the car you’re insuring. Happily, there are ways to cut the cost of your auto insurance though, so take those into consideration when you ask for quotes.

Repairs and Maintenance

At minimum, you’ll pay for regular servicing to keep your car’s warranty in effect. You’ll also need to buy tires at some point, wiper blades, brake pads, drive belts and hoses. In other words, there are wear items you’ll need to consider.

While prices vary from car to car, as well as by how you drive and under what conditions, AAA puts the average cost at just under $1,200 annually — or $100 a month.

Interest on the Car Loan

This one will be folded into the monthly payment you make, however it shouldn’t be overlooked. The amount of your interest payment will vary according to the down payment you make, your credit history and the prime interest rate at the time you take the loan.

With that said, the rate you get when you buy the car isn’t the one with which you have to be stuck. If you were locked into a higher interest rate because of your credit history or because the prime rate happened to be high when you got the car, you can look into car refinancing with a company like RoadLoans once things get better.

Use Taxes/Registration Fees

You’ll pay registration fees each year. This, in effect, is the tax from which comes your portion of the money used to maintain the roads, bridges and tunnels you’ll use.

The good news is, this one goes down as your car gets older each year. The bad news is if you’ve chosen an expensive car, your cost will be higher than average. You’ll usually find a vehicle registration fee calculator at your state’s DMV website.

As you can see, there are more expenses associated with owning a car than meets the eye. Running the numbers to ensure your budget will cover them all will help you derive the maximum enjoyment from your new vehicle.

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.