How Much Does a Car Actually Cost You?

Calculating how much driving costs a month

Been watching more YouTube videos on urbanism and transportation, which has put me in the spirit of actually crunching some data.

So this week, I’d like to explore the personal cost of driving a car.

More specifically, I’m going to try to answer a specific question: what does an average person have to pay each year to drive a car?

Answering this question will require adding up all the costs of driving a car.

This calculation will include the cost of gas, the price of the car, and insurance/maintenance costs, among other things.

Because this is only an analysis of personal costs, externalities will not be included in this analysis. The huge cost of driving on society that these externalities cause, of course, could easily be its own in-depth article.

So what does driving truly cost an average person? Let’s dive in.

Gas Cost

According to J.D. Power and Associates, the national average spending on gas is $150 to $200 a month.

So I’ll just average that out to $175.

This cost, of course, will be higher or lower depending on a number of factors, such as how much you drive, what kind of car you have, and the cost of gas in your area. A truck driver in California, for example, might end up spending way above $175 a month, while a driver with a short commute in Alabama might spend way less.

To be fair, I’ve seen estimates much higher than this, but I’ll stick with this number to be safe.

The Price of the Car

Okay, now for the price of the car.

The cost of a car, of course, can vary widely. It’s also a difficult thing to break down into monthly cost, especially considering the original price paid and the hypothetical resale value.

It gets a little easier when you factor in car payments, which break down into easy monthly amounts. The average car payment for a new vehicle is $729, and for a used car is $528.

For the overall cost number, I’ll use the BLS Consumer Expenditure Survey Numbers for 2020, which puts the annual cost of car purchases at $4,523.

Divide this number by 12, and we get a monthly figure of $377.

For posterity, I’ll provide a calculation with this number, and with an average car payment number as well, so we cover all our bases.

Maintenance, Repairs, Tires

General maintenance and repairs on vehicles can vary a lot, changing depending on how old your vehicle is and whether it’s covered by warranty or not. That’s why we’re also going to provide a general number based on AAA estimates.

Working with on 2022 AAA numbers, we're calculating the total based on a cost of 10.64 cents per mile (for a regular sedan) for maintenance and repairs. At 14,263 miles driven annually, this cost would be $1,517 a year.

Divided by 12, this cost is $126 a month.

Licensing, Registration, and Taxes

Another factor that can vary depending on the vehicle and the city/state you live in is taxes and registration. This cost can range from $20 to $30 all the way to hundreds of dollars, depending on smog fees, higher taxes, etc…

That’s why I’m going to have to depend on more estimates from a trusted source. Using AAA again, they list the total cost of licensing, registration, and taxes at an average of $753 a year. That works out to a cost of $62.75 a month.

Insurance

According to NerdWallet, the average cost of car insurance comes out to $165 monthly.

I als found a AAA number for full insurance in 2022, coming out to $1,694 for a medium sedan, running $141 monthly.

I’m going to use this figure, erring on the safe side of the estimates, but take it with a grain of salt. I actually pay way less than this. I do have a great driving record (not bragging, I swear) and own a Toyota Prius, so I may be an outlier in this scenario.

So, total insurance cost for this calculation will be $141 monthly.

The Total Cost

Now for the grand calculation.

Monthly Cost Using Annual Car Expenditure:

• Gas: $175

• Cost of Car: $377

• Maintenance, Repairs, Tires: $126

• Licensing, Registration, and Taxes: $62.75

• Insurance: $141

Total Cost: $881.75

Monthly Cost Using Average Used Car Payment:

• Gas: $175

• Cost of Used Car Payment: $528

• Maintenance, Repairs, Tires: $126

• Licensing, Registration, and Taxes: $62.75

• Insurance: $141

Total Cost: $1,032.75

These calculations are, of course, an estimate. Costs could go up or down based on any of these factors, such as having a cheaper or more expensive car, repairs, and cost of gas, among others.

I, for example, bought my car several years ago for $4000 outright, so my monthly cost for owning it would be much lower than some estimates. In many cases, though, having a cheaper car just means you’re going to spend more on repairs in the long run.

So what’s your take? If you’re a car owner, do you spend more or less than this each month?

Or did I leave out a cost I should have accounted for? For example, I didn’t include parking, which can be a big expense for some drivers.

Based on these rough estimates, though, it’s no secret that driving is a huge financial burden on those who are barely making ends meet.

Cover Photo by engin akyurt on Unsplash

Resources:

2022 AAA Car Ownership Averages