Owning a car can be a pain in the wallet. To prove it, AAA has conducted a study that reveals just how much the average American pays for the privilege of having a car (or truck, or SUV, or minivan) in her driveway.
There's good news and bad news to be found in the study. Let's get the bad out of the way: AAA says that folks who purchase new cars in 2017 will spend $8,469 over the course of the year, or $706 each month. That's a major mountain of moolah.
The good news? Those prices aren't consistent across the board, and if you're shopping for a new ride, there are ways to minimize your monthly expenditures.
How the study works
To compile its assessment, AAA looked at a variety of costs that vehicle owners incur, including insurance, registration, taxes and finances charges.
Obviously, insurance is a major expense--though as we recently discussed, where you live can soften or worsen the blow. The average annual premium in the U.S. currently runs around $1,318 for a middle-aged driver with good credit and no accidents on his record.
Repair and maintenance costs add up, too. Unlike insurance, however, which is paid in regular intervals, maintenance can be sporadic, and as a result, it's easy to lose track of how much you've spent. With replacing tires, oil changes, and other services related to typical wear and tear, it costs an average of $1,186 per year to keep cars humming along.
The costs of fuel can vary wildly from model to model. Pickups are the most money-hungry rides on the road, costing around 13.88 cents per mile, while electric cars are one-tenth of that, at around 3.68 cents per mile. Model-year 2017 and 2018 vehicles cost an average of 10 cents per mile, or about $1,500 per year.
The biggest cost of all, however, is one you might not think about because you don't pay for it directly: depreciation. It's particularly pricey for new car buyers because new vehicles lose value rapidly over the first few years of ownership, with the rate of depreciation slowing over time. AAA notes that in their first five years on the road, new cars lose an average of $15,000, or nearly half their initial cost. With today's used car glut, the problem is even worse thanks to an oversupply of used vehicles and weakening demand.
The winners, the losers
Not all vehicles are created equally, and that's especially true when it comes to the costs of ownership. Here are some average annual costs, broken out by vehicle segment, for you to consider when shopping the showrooms:
- Small sedan: $6,354
- Small SUV: $7,606
- Hybrid: $7,687
- Medium sedan: $8,171
- Electric vehicle: $8,439
- Minivan: $9,146
- Large sedan: $9,399
- Medium SUV: $9,451
- Pickup truck: $10,054
Why the big differences? Small sedans and SUVs benefit not only from lower upfront costs, but also from slower rates of depreciation. This year, new small sedans will lose about $2,114 in value, and small SUVs will shave off $2,840.
At the other end of the depreciation scale, we find minivans and electric vehicles, which will lose $3,839 and $5,704 this year, respectively.
Pickups have the highest cost of ownership, not only because they use more fuel, but also because they're generally pricier to insure. That's because, as larger vehicles, they can cause more damage than smaller cars when they're involved in collisions, and insurers have to pay for that damage. Also, many trucks have specialized transmissions like 4x4, which makes them more costly to repair.
If you're looking for the best possible deal on your next vehicle, consider opting for a used car. Prices are even lower than usual at the moment, and as an added bonus, since they're not brand new, their rates of depreciation have begun to slow, meaning that your investment will retain more of its value.
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