The cost of car ownership has become one of the biggest sources of inflation — and one of the most frustrating household expenses — in American life. According to the 2024 Your Driving Costs study from AAA, the average cost of owning a new car is $12,297 per year.
Auto insurance, auto loan costs, rising costs of car maintenance, and depreciation are all factors in the sky-high costs of car ownership. But the good news is drivers can still make a few strategic moves to reduce their costs.
Let’s look at what’s driving the high cost of the average American’s car spending in 2024 — and how drivers can find better deals on auto insurance and more.
Why is the average cost of car ownership $12,000?
In its 2024 Your Driving Costs study, researchers at AAA found the average new car in America sells for $38,883. But the sticker price is not the only cost of car ownership. Motorists continue to pay long after they drive their newly purchased vehicle off the lot.
Depreciation — the loss of a car’s financial value as it gets older and gains mileage — is a big factor. Fuel is another, whether that’s gas or charging an electric vehicle. Then there are taxes, maintenance, interest on auto loans, and more.
Auto insurance is one of the biggest costs of car ownership. Anyone who wants to reduce their costs of car ownership should start by shopping around for auto insurance price quotes. Click here to learn more about the best cheap car insurance companies — and see how to get a better deal on auto insurance in 2025.
Here’s a breakdown of how the average cost of car ownership reached beyond $12,000, in order of largest to smallest costs:
|
Cost Category |
Dollars Spent per Year |
|---|---|
|
Depreciation |
$4,680 |
|
Fuel |
$2,235 |
|
Auto insurance |
$1,715 |
|
Maintenance, repair & tires |
$1,520 |
|
Auto loan finance costs |
$1,332 |
|
License, registration & taxes |
$815 |
| TOTAL | $12,297 |
Data source: AAA, Your Driving Costs 2024
Why it’s so expensive to own a car
The AAA Your Driving Costs study found a few big trends are shaping the high cost of car ownership in America today:
Car prices keep going up
Simply put, new cars cost a lot of money nowadays. Here’s how much more expensive new cars have gotten just in the past few years, compared to previous AAA data:
|
Year |
Average New Car MSRP |
% Change vs. Previous Year |
|---|---|---|
|
2024 |
$38,883 |
11.5% |
|
2023 |
$34,876 |
4.7% |
|
2022 |
$33,301 |
N/A |
Data source: AAA, Your Driving Costs (2022-2024), plus author’s calculations
Cheap auto loans are harder to find
More than 80% of new car purchases use auto loan financing. But during the past few years of rising interest rates and rising vehicle prices, auto loans have gotten more expensive. As of June 2024, the average new car loan amount was $39,266 — up from $31,170 five years earlier. That’s a 26% increase.
Good news: especially for drivers who have decent credit and who buy newer vehicles, auto loan rates might fall. During its last two meetings in September and November, the Fed cut interest rates by a total of 0.75%. This will help drive down the APRs on the best auto loans, although not all drivers will qualify based on credit score and vehicle type.
Bottom line
Want to save on car ownership costs? Start by buying a cheaper car. This is easier said than done, but used car prices have declined in 2024. New cars are also getting more affordable and, hopefully, borrowing costs will fall as auto loan APRs come down.
For many drivers, insurance is the biggest cost of car ownership that’s within their control. Some car insurance companies offer cheaper rates than others — it pays to shop around to find the best deal. Drivers who own their homes should also consider bundling auto insurance with homeowners insurance for bigger discounts.
