The Real Cost of Owning a Car — US

5 min readMay 18, 2021


When buying a new car, don’t just look at the price tag. There’s maintenance, insurance, and the fuel cost per year to consider. We all know that these costs add up, but a few of us know exactly how much it really costs to own a car.

Cars are expensive. Most of us will evaluate all costs and understand our budget restraints when making this decision. But staying realistic is key to choosing a good deal. To do that, it is important to understand the actual average cost of owning a car in the US prior to committing to a model.

The average period of ownership and the average number of miles a car will cover in its lifetime determines the real cost of owning a vehicle. With better engineering and design, today the average life of a car is 15 years.

And the average distance a car travels is well estimated by the US Department of Transportation’s Federal Highway Administration, which reports it to be about 13,476 miles per year. Combining the two means that the average car in the US will travel 202,500 total miles in its lifetime.

So, what is the real cost of buying, maintaining, and operating a car on the roads of America?

Costs Don’t Stop at Purchase

There are six significant costs when it comes to car ownership.


A new car depreciates by 11% the minute it has been driven off the lot. In the average 15-year lifespan, it starts depreciating by another 10% of the original value per year, which continues for the first five years. Depreciation hurts more early in a car’s life. A car would now have to depreciate by another 3.5% of its original value per year, for the next six years to reach an eventual value of $1200, which is the value of the car as scrap metal.

The cost of financing a car depends on your loan duration, interest rate, and credit history. However, a safe estimate for financing costs comes to more than 10 cents per mile.

Maintenance and Repair

New tires, oil changes, or new wiper blades are all costs that we don’t consider. Maintenance and repair costs are similar to depreciation and alter significantly over the life of a car. Initially, all new cars come with a warranty, which covers most maintenance and repairs. This typically lasts for 36,000 miles. But these warranties exclude some key needs for instance oil changes. Which is why one should consider purchasing an extended car warranty and factor in that as a cost when buying.

After the initial warranty period, maintenance and repair costs can be expected to increase linearly. With a new car from a reputable company, one can expect to pay around $1,341 per year, on maintenance. And an old car will cost more than twice as much as a new car, which in general translates to ~21 cents per mile as opposed to 8 cents per mile for a new one.

According to the EPA, the average car gives 25.1 miles per gallon of gas. Taking the average gas price, in general one can estimate gas cost at 10 cents per mile. This consideration leaves out the fact that the gas mileage will change over the lifetime of a car, and this cost will go up in time.

Registration & Inspection

Registration and inspection are two expenses that don’t necessarily apply uniformly in all states. Some states have a flat rate, and others are weight-based, value-based, or even age-based. The average cost of registration can be taken to be $54 per year or 0.4 cents per mile. Do look up your own state’s costs.

Similarly, not all states require mandatory car inspections and vary for others. For instance, in New York, inspection typically costs $20 per year or 0.15 cents per mile.


Of all the factors on this list, car insurance costs are among the biggest variable. It is determined by several factors like credit score, age, marital status, the city in which you live, and how often you drive your vehicle. All of this impacts how much you will pay. The average yearly cost of a full coverage car insurance ranges between $1300-$1600 to a minimum coverage of $300-$700. This averages out to 8 cents a mile. In case of a car accident, the deductible chosen by you will come into play as well.

The Grand Total

The total cost of owning and operating the average car in the US falls between 35 cents per mile to 65 cents per mile over the average lifetime of a car. So, for a $30,000 car, the total cost of ownership over 15 years adds to an estimate $91,200, driven for 202,500 miles, averaging to 45 cents per mile.

A responsible car owner can minimize the costs of ownership over the vehicle’s lifetime, by choosing the vehicle wisely, and maintaining some good practices.

01 Choose a car with Advanced Driver Assistance Systems

When buying a car, consider adaptive cruise control and a collision-avoidance system, which can reduce accidents. Safety features like automatic emergency braking, blind-spot monitoring, and systems that warn against lane drifting are now becoming the standard.

02 Invest in-vehicle management systems

These systems monitor and offer tips for improving fuel economy, alert when driving too fast, monitor the vehicle for trouble, and give reminders for maintenance requirements.

03 Address distress signals on time

When an alert for inspection, oil change or other issues are received, ignoring that yellow flashing sign will not make it go away. Avoid escalated costs for what could have been a trivial cost, by paying attention to the warnings promptly.

04 Choose the right repair service

Cars require skilled and trained mechanics that understand electronics, engineering, and computers. By seeking out certified, and reputed repair shops, or choosing your insurance companies third-party partners, ensure good health for your car in the long run. Opting for a roadside assistance service too is a recommended practice.