Average Cost of Owning a Car 2026

Owning a new car costs $12,863 a year — $1,072 a month, or about 86 cents a mile — according to AAA’s Your Driving Costs 2026 study. That is the full cost of owning and running an average new vehicle driven 15,000 miles a year and kept for five years, and it is far more than the monthly loan payment most buyers budget for.

The average monthly payment on a new car was $765 in the second quarter of 2026, according to Experian. The gap between that $765 payment and AAA’s $1,072 true monthly cost is the whole point of this guide: the payment is only the cash you hand the lender. Depreciation, insurance, fuel, maintenance, taxes and interest are real costs too, even when no monthly bill arrives for them.

This guide breaks down every dollar of AAA’s $12,863, compares gas, hybrid and electric cars on total ownership cost, works through a real five-year example, and shows the choices that actually move the number.

The average cost of owning a car in 2026, at a glance

Figures: AAA, Your Driving Costs 2026, released September 15, 2026. AAA’s study covers five top-selling 2026 models in each of seven vehicle categories, averaged over five years and 75,000 miles at 15,000 miles a year. Fuel is priced at 17.32 cents a mile and maintenance, repairs and tires at 11.73 cents a mile; the per-year figures above are those rates times 15,000 miles. Because AAA rounds its per-mile rates, the six lines add to $12,864 — $1 above AAA’s published $12,863 total. Parking and tolls are not included.

Three facts worth knowing before the detail:

• Depreciation is the biggest cost, and it never sends you a bill. At $4,422 a year it is more than a third of the total — bigger than fuel ($2,598) or insurance ($2,098) on its own, and nearly as large as the two combined ($4,696) — yet it only shows up when you sell or trade the car.
• Do not add the loan payment and depreciation together. The principal part of each payment is buying the car; depreciation is that purchase being used up. Counting both double-counts the same money. The true economic cost is depreciation plus interest plus running costs. The payment plus running costs is the monthly cash cost.
• AAA’s $12,863 is not directly comparable with last year’s $11,577. AAA changed its vehicle mix and methodology for 2026 — including folding selected EVs and hybrids into the same categories as gas cars — and says plainly the two years should not be used to calculate a like-for-like increase.

1. Depreciation — $4,422 a year

Depreciation is the difference between what you pay for a car and what it is worth when you sell it, spread over the years you own it. AAA averages it at $4,422 a year over five years on a sales-weighted average sticker price of $39,376 — about $22,110 of lost value by year five.

Why it matters: It is the single largest ownership cost, and it is the one buyers most often ignore, because it is silent. A car that loses value fast can cost you more than a car with a bigger fuel bill. Depreciation is also why the cheapest car to buy is not always the cheapest car to own: a model that holds its value well can beat a cheaper rival over five years.

What to consider: Depreciation is steepest in the first year and varies sharply by model, not just by brand. Luxury cars, large SUVs and EVs with fast-changing technology tend to lose value faster; Toyotas and Hondas historically hold up better, which is one reason our ranking of the most reliable car brands puts Toyota at the top of Consumer Reports’ predicted-reliability table. Before you buy, check the model’s expected resale value, not just its sticker price — and remember that a $51,109 average transaction price (Kelley Blue Book’s October 2026 figure, in our average car prices guide) means the average buyer is depreciating a much more expensive car than AAA’s $39,376 study average.

How to cut it: Buy a model with a strong resale record, keep the car longer (depreciation slows sharply after year three), and avoid expensive options that add little at trade-in time.

2. Fuel — $2,598 a year

Fuel costs 17.32 cents a mile in AAA’s 2026 study, or $2,598 at 15,000 miles a year. AAA priced regular-grade gasoline at $4.152 a gallon at the time of the study, and home electricity for EV charging at 18.0 cents per kilowatt-hour.

Why it matters: Fuel is the cost buyers watch most closely, but it is only about a fifth of the total. A car that saves $500 a year on gas but loses $1,500 more a year in depreciation is a worse deal, not a better one.

What to consider: Fuel cost depends on miles driven, local prices and the car’s real-world efficiency — not its window-sticker number alone. EVs change the picture sharply on this one line: AAA found charging costs for EVs about 66–70% lower than fuel costs for gas cars across the categories studied. But as the powertrain comparison below shows, cheap energy alone does not make an EV cheap to own.

How to cut it: Drive fewer miles (every mile costs about 29 cents in fuel plus maintenance and tires alone), keep tires at the right pressure, and if you buy electric, charge at home — our electric car charging costs guide puts home charging at about $654 a year versus about $1,944 on public chargers.

3. Insurance — $2,098 a year

Full-coverage insurance averages $2,098 a year in AAA’s study — about $175 a month. AAA prices this line for a full-coverage policy; your own quote depends on your state, ZIP code, age, driving record, credit and the car itself.

Why it matters: Insurance is the second-largest cash cost after fuel, and it is the cost with the widest spread. Bankrate’s February 2026 state study put the cheapest state, Idaho, at $1,476 a year for full coverage and the most expensive, Louisiana, at $4,135 — a $2,659 gap for the same coverage, driven by state law, litigation, weather and theft rates. Two buyers with identical cars can pay wildly different amounts.

What to consider: Newer, more expensive and more powerful cars cost more to insure, and EVs often carry higher premiums than equivalent gas cars because repairs cost more. AAA’s own per-type table shows it: a medium EV sedan costs $2,070 a year to insure versus $1,704 for the gas version. Get quotes before you sign, not after — the insurance bill can change which car is actually affordable. Our car insurance quotes guide explains how to compare quotes properly.

How to cut it: Compare at least three quotes, raise your deductible if you can afford the risk, bundle home and auto where it helps, and ask about discounts for safe driving, low mileage and safety equipment.

4. Maintenance, repairs and tires — $1,760 a year

Maintenance, repairs and tires cost 11.73 cents a mile in AAA’s study, or about $1,760 at 15,000 miles a year, averaged over the first five years of ownership.

Why it matters: This is the cost that grows as the car ages. In the first years most of it is routine — oil, filters, tires, brakes — and much of it is covered by warranty. After year five, repairs start to dominate, which is why keeping a car longer is usually cheaper than replacing it, until repair bills spike.

What to consider: EVs have fewer moving parts and lower maintenance costs than gas cars in AAA’s comparison — a medium EV sedan averages $1,602 a year for maintenance, repairs and tires versus $1,827 for the gas version — but their tires can wear faster and cost more. Hybrids sit in between. The reliability of the exact model matters more than the badge: check model-level data in our most reliable car brands guide before assuming any car will be cheap to keep.

How to cut it: Follow the service schedule, fix small problems before they become big ones, and budget for tires — a full set is the single biggest routine expense most owners forget.

5. Finance charges — $1,184 a year

Finance charges — the interest on your car loan — average $1,184 a year in AAA’s study. AAA assumes a five-year loan with 15% down at the national average rate, including taxes and first-year registration in the calculation.

Why it matters: Interest is pure cost: it buys you nothing except time. On a $35,000 loan, the difference between a 6% rate and a 9% rate is thousands of dollars over five years, and it is decided before you ever sit in the car.

What to consider: The average new-car payment of $765 a month (Experian, Q2 2026) is mostly principal, not interest — but longer loan terms push total interest up even as they push the monthly payment down. A 72- or 84-month loan feels affordable and costs far more. Our auto loan calculator guide shows how term and rate change the total, and our how to finance a car guide explains pre-approval and dealer markup.

How to cut it: Get pre-approved by a bank or credit union before talking to the dealer, keep the term as short as your budget allows, put more down if you can, and negotiate the price, the rate and the trade-in as three separate deals.

6. License, registration and taxes — $802 a year

License, registration and taxes average $802 a year in AAA’s study. This line varies more by state than any other except insurance: some states charge a flat fee, others charge a percentage of the car’s value every year.

Why it matters: It is a small share of the total, but it is the cost most buyers forget entirely when budgeting — and in high-tax states it can add thousands over five years.

What to consider: Sales tax is usually due at purchase, while registration renews annually. Some states offer tax credits or rebates for EVs; the federal EV tax credit rules changed in 2026, so check current eligibility before counting on any credit.

How to cut it: You cannot avoid taxes, but you can avoid surprises: ask the dealer for the full out-the-door price, including taxes and fees, before you agree to anything.

EV vs hybrid vs gas: which powertrain is cheapest to own?

The hybrid is the cheapest powertrain to own in AAA’s 2026 comparison — not the EV, and not the gas car. AAA compared selected top-selling electric, hybrid and gas models in the same four categories (medium sedans, compact SUVs, medium SUVs and pickup trucks), and hybrids cost less annually than gas models in all four.

Figures: AAA, Your Driving Costs 2026. The EV costs 29.1% more per year than the equivalent gas sedan, despite charging costs 66–70% lower than gas fuel costs.

Why the EV loses on total cost: Depreciation. AAA found EV medium sedans had about twice the depreciation of gas models, and higher fees and finance costs on top of a higher purchase price. Cheap energy could not close a gap that big. The same pattern — lowest fuel costs, highest depreciation — ran through AAA’s EV comparisons.

Why the hybrid wins: Hybrids combine meaningful fuel savings with a smaller price premium than EVs, so their depreciation penalty is small. In the medium sedan class the hybrid saves $378 a year over gas and $3,458 a year over the EV.

The honest exception: These are 2026 averages for new cars, and they depend on purchase price. A cheaper EV with a tax credit, or an EV bought used after its steepest depreciation, can beat these averages — which is why our best used EVs under $25,000 guide is worth reading before ruling EVs out. And if you can charge at home on cheap overnight electricity, the EV’s fuel advantage grows; our charging costs guide has the numbers.

Vehicle size matters more than powertrain

A half-ton pickup costs $1.10 a mile to own and run — 48 cents more per mile than a small sedan at $0.62 — adding an average of $7,191 a year at 15,000 miles, according to AAA. No fuel saving or powertrain choice closes a gap that size.

The lesson is simple: the biggest ownership-cost decision is the size and price of the car, not what powers it. A small sedan costs roughly $9,300 a year to own at AAA’s per-mile rate; a pickup costs roughly $16,500. Before comparing trims or powertrains, make sure the vehicle fits your actual needs — a truck bought for two weekends a year is the most expensive mistake in car buying.

Worked example: five years of a medium sedan

Take the medium sedan class and keep the car five years at 15,000 miles a year, using AAA’s annual totals:

The hybrid saves $1,890 over five years against the gas sedan. The EV costs $15,400 more than the gas sedan over the same five years — about $257 a month extra — even though it spends far less on energy. That is the depreciation gap, made visible: AAA found EV charging costs 66–70% lower than gas fuel costs, yet that saving does not cover the EV’s extra depreciation and finance costs at new-car prices.

Now compare with the average new car: at AAA’s $12,863 a year, five years costs $64,315 — more than the medium gas sedan’s $52,910, because the average includes pickups and large SUVs. And remember the cash-versus-cost distinction: the average buyer pays about $765 a month on the loan, but the car truly costs about $1,072 a month. Budget for $1,072, not $765, and the car will not surprise you.

How to choose a car you can actually afford

1. Budget on total cost, not the payment. Multiply AAA’s $1,072 a month by your own situation: a small sedan will be less, a pickup or luxury SUV will be more. If the total cost is more than about 15–20% of your take-home pay, the car is too expensive, whatever the payment looks like.
2. Pick the size first, the powertrain second. A hybrid small sedan beats a gas pickup by thousands a year. Get the smallest vehicle that genuinely fits your life.
3. Check depreciation before you fall in love. Look up the model’s resale value and reliability record. A car that holds its value is worth paying slightly more for upfront.
4. Get pre-approved and keep the loan short. A shorter term costs more per month and far less in total. Use our auto loan calculator guide to see the difference before you sign.
5. Price insurance before you buy. Quotes vary by thousands a year between models and states. Our car insurance quotes guide shows how to compare them.
6. Consider used for the biggest saving of all. A 3-year-old car has already taken its steepest depreciation hit. If your budget is tight, our cheapest new cars under $25,000 guide and best used EVs guide show both sides of that choice — and if your credit is weak, read our bad-credit car loans guide before a dealer offers you a rate.
7. Lease or buy? Leasing can look cheap monthly because you never pay for the car — but you also never own it. Our lease vs buy guide compares the six-year costs.

Frequently Asked Questions

How much does it cost to own a car per month in 2026?
$1,072 a month, on average, for a new car — AAA’s Your Driving Costs 2026 study puts the annual cost at $12,863, or $1,071.92 a month, at 15,000 miles a year over five years. That is the full economic cost, including depreciation. The average loan payment alone is $765 a month (Experian, Q2 2026), which is why the true cost surprises most buyers.

What is the biggest cost of owning a car?
Depreciation, at $4,422 a year — about a third of AAA’s $12,863 total. It is bigger than fuel ($2,598) and insurance ($2,098), and it never appears as a monthly bill. It only becomes cash when you sell or trade the car, which is why buyers underestimate it.

Is it cheaper to own an EV or a gas car in 2026?
On total cost, the gas car is cheaper than the EV in AAA’s 2026 comparison — and the hybrid is cheapest of all. A medium EV sedan costs $13,662 a year to own versus $10,582 for the gas version, because the EV’s depreciation is about twice as high. The hybrid medium sedan costs $10,204 a year, the lowest of the three. EVs win clearly on energy costs (charging 66–70% cheaper than gas), but that saving does not cover their depreciation gap at new-car prices.

How much does it cost to own a car per mile?
About 86 cents a mile for an average new car in 2026, per AAA — $12,863 a year at 15,000 miles. Fuel plus maintenance and tires alone are about 29 cents a mile; the rest is depreciation, insurance, finance and taxes. A small sedan costs about 62 cents a mile; a half-ton pickup costs $1.10 a mile.

Does owning a car get cheaper if I drive less?
Partly. Fuel, maintenance and tires fall with every mile you do not drive — about 29 cents saved per mile, or roughly $1,450 a year on fuel and maintenance alone if you drive 10,000 miles instead of 15,000. But the fixed costs — depreciation, insurance, finance and registration — change little with mileage: you pay them whether the car moves or not.

How much should I budget for car insurance in 2026?
AAA averages $2,098 a year for full coverage, but your state matters more than the average. Bankrate’s February 2026 state study ranged from $1,476 a year in Idaho to $4,135 in Louisiana for full coverage. Get quotes for the exact car before you buy — the spread between models can be hundreds of dollars a year.

Is buying a used car cheaper than buying new?
Usually yes, on total cost — because someone else paid the steepest depreciation. A 3-year-old car costs less to buy, less to insure and less to finance, and its depreciation from here is slower. The trade-off is higher maintenance and repair costs, and no factory warranty unless it is certified pre-owned. Compare the exact used car against a cheap new one — our cheapest new cars guide starts at $20,550 — before deciding.

Bottom Line

A new car costs $12,863 a year to own in 2026 — $1,072 a month, about 86 cents a mile. The loan payment is only part of it: depreciation alone is $4,422 a year, and insurance, fuel, maintenance, interest and taxes add the rest. The hybrid is the cheapest powertrain to own this year, the EV is the most expensive at new-car prices despite the cheapest energy, and the size of the car matters more than any of it — a pickup costs about $7,191 a year more to own than a small sedan.

Budget for the full $1,072, pick the smallest car that fits your life, check its resale value and its insurance quote before you sign, and keep it longer than five years if you can. That is how the average stops being your average.

Sources & Pricing Note

All headline figures are from AAA, Your Driving Costs 2026, released September 15, 2026: $12,863 a year ($1,071.92 a month) for an average new vehicle at 15,000 miles a year over five years and 75,000 miles; depreciation $4,422, full-coverage insurance $2,098, finance charges $1,184, license/registration/taxes $802, fuel 17.32 cents a mile, maintenance/repairs/tires 11.73 cents a mile; gas $4.152 a gallon, home electricity 18.0 cents per kWh; medium sedan gas $10,582, hybrid $10,204, EV $13,662 a year; pickups $1.10 a mile vs small sedans $0.62 a mile. AAA’s study covers five top-selling 2026 models in each of seven vehicle categories; its 2026 methodology changed, so its total is not comparable with the 2025 figure of $11,577. The average new-car payment of $765 a month is from Experian, Q2 2026, as reported by NerdWallet. The average transaction price of $51,109 is Kelley Blue Book, October 2026, as covered in our average car prices guide. State insurance figures are from Bankrate’s February 2026 state study ($1,476 Idaho, $4,135 Louisiana, full coverage). AAA’s $39,376 is the sales-weighted average sticker price of the models in its study — not the market average transaction price, which is higher. Prices exclude parking and tolls. Check current prices, rates and quotes before buying; your costs will differ by vehicle, state, driving habits and driver profile.

Last updated: November 2026

About the Author

Written by William, founder and editor of MotorAmaze — an independent guide to buying, financing and running a car in the US and UK. Read more at https://motoramaze.com/about/.