The Costs of Owning a New Car Climbs | Smart Change: Personal Finance

The cost of owning a new car rose 5% in the last year, according to the 2021 AAA Your Driving Costs Study. Costs increased across all categories, bringing the average expenditure up to $9,282 a year, or $773.50 a month.

AAA reviewed 45 top-selling sedans and SUVs, factoring in six expense categories: fuel, maintenance, full-coverage insurance, license/registration/taxes, depreciation and finance charges.

The biggest driver in the increase was longer loan terms, combined with higher purchase prices, AAA reported. Consumers paid 24% more in interest on new car loans this year, the study found, at least partly because more borrowers chose 72- or even 84-month loans. AAA estimates that total finance charges increase by $1,000 for every 12 months a loan is extended.

Additionally, AAA found that:

  • Average insurance costs increased by $5.
  • Buyers paid $14 more in licensing, registration and taxes.
  • Depreciation rates slowed down, so cars retained their value.
  • Smaller, fuel-efficient cars are the least expensive to own at $7,114.
  • Half-ton pickup trucks are the most expensive to own at $10,839.

Read More: The Costs of Owning a New Car Climbs | Smart Change: Personal Finance

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