It costs $433 more to own a car than it did just last year. According to new AAA research, the true annual costs of new vehicle ownership rose 5% in 2019 to $9,282. That’s the highest cost since AAA began tracking expenses in 1950.
A key contributor to the increase was a large jump in financing costs. Rising federal interest rates and higher vehicle prices fueled a spike in finance charges, which rose 24% in 2019 from $744 to $920. It comes as long-term loans are becoming more common. Such loans offer lower monthly payments, but they ultimately cost the consumer more, meaning car buyers are paying more, and longer, for vehicles that lose value the moment they’re sold.
“Finance costs accounted for more than 40% of the total increase in average vehicle ownership costs,” said John Nielsen, AAA’s managing director for Automotive Engineering & Repair. “AAA found finance charges rose more sharply in the last 12 months than any major expense associated with owning a vehicle.”
The new figures come from “Your Driving Costs,” which reviews nine categories of vehicles to determine the average annual operating and ownership costs of each. AAA focuses on top-selling, mid-priced models and compares them across six expense categories: fuel prices; maintenance/repair/tire costs; insurance rates; license/registration/taxes; depreciation; and finance charges. Annual average costs increased in each category.
Even as finance costs jumped significantly, depreciation still remains the single largest cost of car ownership. Depreciation is a measure of how quickly a car loses value. In 2019, it accounted for more than a third (36%) of the average annual cost. It slowed slightly this year, with vehicles studied losing an average of $3,334 a year, up $45 – or 1.4% – from last year. In 2018, depreciation rose by $117, or 3.7%. In two vehicle classes this year – small and medium sedans – depreciation costs actually declined.
Other key findings in this year’s “Your Driving Costs” study include:
- Average fuel cost rose to 11.6 cents per mile, 5% higher than last year (about half a cent). The per-mile increase was driven by gasoline prices, which are up 15.6 cents per gallon over the timeframe covered by the study. Fuel costs vary widely by vehicle type, ranging from a low of 3.65 cents per mile for electric vehicles, to 15.67 cents per mile for pickup trucks.
- Average maintenance and repair costs climbed marginally to 8.94 cents per mile, up 8.9% over last year.
- Electric vehicles had the lowest maintenance and repair costs – 6.6 cents per mile – while medium-sized SUVs had the highest at 9.6 cents per mile.
- The cost of licenses, registration fees and taxes rose $14 to $753 per year, an increase of 1.9%
To learn more, determine your own costs, and download the 2019 “Your Driving Cost” brochure, go to AAA.com/YourDrivingCosts.
For more information on the car-buying process, visit AAA.com/AutoBuying, a comprehensive resource that can help make the process more manageable.