How much does it cost to own a car per month?

The average new car costs about $1,015/month or $12,182/year in total ownership costs, including the payment ($738), insurance ($168), gas ($150), maintenance ($100), registration/taxes ($42), and depreciation (hidden). A used car averages $690/month.

Is it cheaper to buy new or used?

Used cars are significantly cheaper overall. While monthly payments are lower ($532 vs $738), the real savings come from reduced depreciation—a new car loses 20-30% of its value in the first year alone.

True Cost of Owning a Car in America (2026)

A car is the second-largest purchase most Americans make, and the ongoing costs add up far more than most people realize. Here’s the true cost.

Total Cost of Car Ownership (Annual)

New Car

Expense	Monthly	Annual	% of Total
Car payment (avg. new)	$738	$8,856	47%
Insurance (full coverage)	$168	$2,016	16%
Gas/fuel	$150	$1,800	14%
Maintenance and repairs	$100	$1,200	10%
Registration, taxes, fees	$42	$500	4%
Parking and tolls	$50	$600	5%
Total (excluding depreciation)	$1,248	$14,972	—
Depreciation (hidden cost)	$400	$4,800	—
True total cost	$1,648	$19,772	100%

Used Car (3-5 Years Old)

Expense	Monthly	Annual	Savings vs. New
Car payment (avg. used)	$532	$6,384	-$2,472
Insurance (full coverage)	$145	$1,740	-$276
Gas/fuel	$150	$1,800	$0
Maintenance and repairs	$130	$1,560	+$360
Registration, taxes, fees	$38	$456	-$44
Parking and tolls	$50	$600	$0
Total (excluding depreciation)	$1,045	$12,540	-$2,432
Depreciation	$175	$2,100	-$2,700
True total cost	$1,220	$14,640	-$5,132

Paid-Off Car (5+ Years Old, No Payment)

Expense	Monthly	Annual
Insurance (full coverage)	$130	$1,560
Gas/fuel	$150	$1,800
Maintenance and repairs	$175	$2,100
Registration, taxes, fees	$35	$420
Parking and tolls	$50	$600
Total	$540	$6,480

Owning a paid-off car costs less than half of owning a new car with payments.

10-Year Cost Comparison

Strategy	10-Year Total Cost	Monthly Equivalent
New car every 3 years	$197,720	$1,648
New car every 5 years	$167,400	$1,395
Buy new, keep 10 years	$138,000	$1,150
Buy 3-year-old used, keep 7 years	$106,000	$883
Buy 5-year-old used, keep 5 years	$98,000	$817
Buy reliable used, keep until it dies	$78,000-$90,000	$650-$750

The cheapest strategy: Buy a reliable 3-5 year old car and drive it for 7-10+ years.

Car Depreciation Schedule

Year	Value of $35,000 New Car	% Lost	Value Lost That Year
0 (New)	$35,000	0%	—
1	$26,250	25%	$8,750
2	$22,750	35%	$3,500
3	$19,950	43%	$2,800
4	$17,500	50%	$2,450
5	$15,400	56%	$2,100
7	$12,250	65%	—
10	$8,400	76%	—

The first year is the steepest depreciation cliff. Buying a 1-2 year old car lets someone else absorb this loss.

New vs. Used Car Costs by Vehicle Type

Vehicle Type	Avg. New Price	Avg. Used (3-yr)	Monthly Payment (New)	Monthly (Used)
Sedan	$28,000	$18,000	$580	$420
SUV (compact)	$34,000	$23,000	$700	$530
SUV (midsize)	$42,000	$28,000	$860	$640
Pickup truck	$52,000	$36,000	$1,060	$820
Luxury sedan	$55,000	$34,000	$1,120	$780
Electric vehicle	$45,000	$28,000	$920	$640
Minivan	$38,000	$25,000	$780	$580

Gas vs. Electric vs. Hybrid: Running Costs

Cost Category	Gas Car	Hybrid	Electric Vehicle
Fuel/electricity per year	$1,800	$1,080	$540
Maintenance per year	$1,200	$960	$600
Insurance per year	$2,016	$2,100	$2,280
Annual running cost	$5,016	$4,140	$3,420
10-year running cost	$50,160	$41,400	$34,200

EVs cost less to run but typically cost more upfront. The federal EV tax credit ($7,500) helps close the gap.

How to Reduce Car Costs

Strategy	Potential Annual Savings
Buy used instead of new	$2,500-$5,000
Keep car 10+ years	$3,000-$5,000 (avoid depreciation)
Shop insurance annually	$300-$800
Drive less (bike, transit, WFH)	$500-$2,000
DIY basic maintenance	$200-$500
Choose smaller/efficient vehicle	$500-$1,500 (fuel + insurance)
Pay cash or negotiate rate	$500-$2,000 (interest savings)
One-car household	$6,000-$12,000