What’s the Cost of Owning a Car?

Table of contents

• Major expenses of owning and operating a vehicle
• How to calculate your monthly car payment
• Average price of a car
• How to decide how much to spend on a car 
• What monthly auto expenses to expect
• Comparing costs of an EV to a gas-powered car 
• Leasing vs. buying a car 
• True cost of owning a car 
• When to use a personal loan for car expenses

Major expenses of owning and operating a vehicle

Owning a car comes with many different expenses. For example, just to leave the dealership, you’ll need to pay the purchase price. If you lease or finance you’ll have borrowing costs, which could include a down payment. And then there is gas, insurance, routine maintenance, unexpected repairs, and local registration and taxes. Many of these expenses vary depending on how much you spend on the car, how often or far you drive it, and where you live. 

You have little or no control over some of the fixed costs, such as insurance premiums, registration fees, taxes, and even parking costs. Another important fixed cost is depreciation, which is the amount your car loses value over time. These expenses are important factors when deciding to purchase a new or used vehicle.

How to calculate your monthly car payment

Some people can live out the dream of buying a car with cash. For many people, though, this isn’t an option. You may need to rely on some kind of financing to make your purchase.

Unless you’re able to finance your car with a 0% loan through a dealership, credit union, or bank, your monthly payments will include both principal and interest. The amount of interest will be partly determined by your credit score. Your monthly repayment of principal will change depending on the length of your loan and interest rate.

Your monthly payment amount will vary depending on the size of the down payment, which is required by some lenders. In general, a larger down payment means a smaller loan amount and lower monthly payments. Your monthly payment can also be affected by your repayment terms; typically, the longer the term, the smaller the monthly payment.

Average price of a car

According to Kelley Blue Book the average price of a new car has risen to $48,800 in 2025. For new electric vehicles (EV) the average price paid was $55,689.¹

The average price for a used car was $25,180 in March 2025.² The average list price for a used EV was $35,263 in July 2025.³  

The price of cars, of course, varies widely depending on the make of the car, the model, and the year it was made. Additional costs may include taxes and fees charged by individual states or the dealer.

How to decide how much to spend on a car 

The amount you decide to spend on a car will be determined by several factors, including your financial situation and the type of car you either want or need.

Knowing the various costs associated with owning a car can help you decide how much to spend and how to budget for ongoing expenses. You may also want to consider the eventual resale value of your car. If you lease a vehicle, you might include the costs associated with your options of returning the vehicle, buying it, or extending the lease.

If you already have your eye on a car, you could use an online car payment calculator. Just plug in the loan amount, the repayment term, and your estimated annual percentage rate (APR). The calculator will show you the monthly payment.

What monthly auto expenses to expect

As mentioned, your monthly car costs can change a lot depending on your situation. For illustrative purposes, the table below shows average annual out-of-pocket expenses based on a sample car loan. Reviewing this example can help you better understand what to expect and how to plan your budget accordingly. 

*Average amount financed for new-vehicle purchase in the fourth quarter of 2024⁴

**Average auto-loan interest rate for a 60-month new car loan as of August 2025⁵

***Calculated with data from AAA and based on driving 14,000 miles per year ⁶

Cost of car insurance

The cost of car insurance depends on many factors, including where you live. Each state sets its insurance requirements and oversees the prices that companies charge. The cost of insurance could also be affected by your driving history, age, and other details.

To find out what you might pay, you can contact an insurance agent and tell them which car you’re considering. You can also search online at various sites to calculate insurance premiums. This table from NerdWallet shows the minimum car insurance requirements by state.

You might look for ways to save on the cost of car insurance, like increasing your deductible, taking advantage of “good driver” and multi-policy discounts, or comparing rates between insurers. Don’t hesitate to have a conversation with your insurance provider to make sure you get the best deal for your situation.

Average fuel costs

The cost of gas is likely to be a primary factor in your monthly expenses for a car with a combustion engine. Depending on how much you drive and where you live, you might spend hundreds of dollars per month on fuel alone.

It’s important to consider this expense when buying a car, as fuel efficiency varies by model. If this is a determining factor for you, you can consult a list of the most fuel-efficient vehicles. Fueleconomy.gov lets you look up the miles per gallon for a specific make and model or find cars that get a specified minimum number of miles per gallon.

Maintenance and repair expenses

Of course everyone hopes that nothing goes wrong with their vehicle. But most end up at the auto shop every now and then.

Even if your car doesn’t need big repairs, you’ll still have to pay for basic upkeep. For a car, or even for some alternative vehicles, that could include a new battery, tires, brakes, regular oil changes, and state inspections. These costs vary based on your vehicle, where and how often you get it serviced, and if a repair is covered by warranty or insurance.

Researching which cars are most reliable might also be helpful. The less time your car spends at the mechanic, the better. Consumer Reports provides a Guide to Car Reliability & Owner Satisfaction that can help identify cars with a record of good long-term performance.

If you find yourself facing a critical auto repair, such as a catalytic converter, transmission, or water pump replacement, you don’t want to wait to fix it. The first thing to do is check if it’s covered by an active warranty (either standard or extended) or by your insurance. Then, do your research or ask your friends to recommend an auto mechanic you can trust to give you a fair deal and a good repair. If you need help covering these costs, see if a personal loan would help your budget. 

Licensing, registration, and taxes

The cost to license, register, and pay taxes on your car is set by each state. Where you purchase, reside, and register the car will determine the amount you pay and the paperwork required.

If you buy a car in one state but live in another state, there may be additional steps required. Check with your state’s department of motor vehicles or other agencies to determine the costs in your area.

Car depreciation

Although it’s not an out-of-pocket expense, one of the biggest eventual costs of owning a car is depreciation—or the fact that it will lose value over time. AAA reported that the cars they surveyed lost on average $4,680 from depreciation in 2024. 

Fortunately, there are a couple of things you can do to help lessen the effect of depreciation:

• Buy a used car, since much of the depreciation occurs when it leaves the showroom for the first time
• Buy a car that holds its value better than the competition

The first point is clear. The second one might take some research. Each year, Kelley Blue Book shares its “Best Resale Value Awards” list. You can search by brand, overall top 10 winners, and category winners to find out which cars are more likely to have high trade-in or resale values.

Comparing costs of an EV to a gas-powered car

While the cost of a new EV may set you back more than a comparable gas-powered car, the price difference is shrinking. And other costs related to owning an EV may be lower.

Since electric cars are less mechanically complex than gas-powered cars, EVs typically require less standard maintenance, with potential savings adding up to hundreds of dollars a year. EV tax credits and rebates may also be available from federal and state agencies, depending on the type of vehicle, your income, and where you live.

Despite those potential savings, there can be extra upfront expenses associated with owning an EV. Installing a Level 2 (240-volt) charging station at home costs about $2,000 for parts and installation, according to Kelley Blue Book. And there may be more expenses if your home’s electric line needs to be adjusted.

But, EVs may offer significant savings, with government data showing that the average electric vehicle is significantly more efficient in converting energy to propel the vehicle than gasoline-powered cars.

Leasing vs. buying a car 

Whether you lease or purchase a new car depends on several factors, including your budget, how far you typically drive, the purpose of the car, and your personal preferences.

Some people enjoy driving a new car every two or three years. Leasing may simplify the process of getting a new car, especially when it’s time to return the vehicle or switch to a different model.

Leasing comes with financial terms that can differ significantly from an outright purchase. Leased cars often come with mileage limits. There may also be penalties if you end the lease early. And you do not build equity in the asset from your payments. Be sure to review the lease terms carefully and ask your dealership to walk you through any parts that aren’t clear.

But you may find some advantages with leasing. For example, upfront costs and monthly payments might be lower. Because the cars are new, you may save on maintenance costs. And if you’re driving for work, you may be able to deduct your mileage or lease payments from your tax bill.

Working through the pros and cons and figuring out the overall costs can help you determine whether buying or leasing is best for you.

True cost of owning a car

The fact is, it depends. In addition to your purchase price, there are many items to consider in order to budget wisely. These include fuel costs, loan payments, maintenance, and vehicle registration fees.

It can be helpful to make a list of all the potential expenses. Customize your list based on the vehicles you’re considering. That way you can assess whether the car you want fits your current budget.

For some people, car ownership might help expand financial opportunities by making it easier to get to work or school. The added convenience may bring long-term benefits, but it’s important to plan for your budget.

After that, you might decide public transportation or other options are more affordable in the short term and better suited for your situation. Many cities are bike friendly, and walking is good for your wallet, the environment, and your health.

When to use a personal loan for car expenses 

No matter how you pay when buying a car, if you need help covering the costs of car ownership, especially any unexpected expenses, you can always consider applying for a personal loan.

You can’t use a personal loan to buy the car itself. For that, you’ll want a traditional auto loan, which is secured by the value of the vehicle. Secured loans usually offer lower interest rates, because the car acts as collateral. 

But a personal loan can still be useful for any other car-related expenses, such as repairs, maintenance, or upgrades. This gives you the flexibility to use the funds when those costs arise.

Discover® Personal Loans offers loans in amounts from $2,500 to $40,000, and the funds can be sent as soon as the next business day after your acceptance. While a Discover personal loan cannot be used to purchase a car, funds from a personal loan can be used for ongoing car expenses and emergency repairs.

Once you have a handle on what you need in order to cover all the expenses of owning a car, you can start by estimating your monthly loan payments to find an option that works for you.