The Real Cost of Owning a Car: 7 Expenses Beyond Your Monthly Payment

What Does It Really Cost to Own a Car?

The cost of owning a car includes more than the vehicle's purchase price or monthly auto loan payment. Your total vehicle expenses may include:

• Auto loan payments
• Insurance
• Gas or charging
• Routine maintenance
• Repairs
• Registration, taxes and fees
• Depreciation

These costs can vary significantly depending on your vehicle, where you live, how much you drive and other individual circumstances.

Before deciding what car you can afford, it's important to consider all of these expenses together.

1. Your Auto Loan Payment

If you finance your vehicle, your monthly auto loan payment will probably be one of your largest regular vehicle expenses. The amount you pay depends on several factors, including:

• Amount financed: How much you borrow after your down payment and trade-in
• APR: The annual cost of borrowing, including certain fees
• Loan term: How long you have to repay the loan
• Down payment: The amount you pay upfront

When comparing auto loans, look beyond the monthly payment.

A longer loan term can reduce your monthly payment, but it can also mean paying interest for a longer period. Consider both what the payment costs today and what the loan may cost over its full term.

2. Auto Insurance

Insurance is another important part of your monthly vehicle budget. Your premium can depend on factors such as the vehicle you choose, your location, coverage selections and driving history.

That's why it's smart to research insurance costs before buying a vehicle rather than after.

If you're comparing two vehicles with similar prices, for example, getting insurance estimates for both could give you a more complete picture of their ongoing costs.

Credit Union Tip: When determining how much car you can afford, consider your anticipated insurance payment alongside the estimated loan payment.

The question shouldn't simply be: "Can I afford this car payment?"

A better question is: "Can I comfortably afford everything that comes with owning this car?"

3. Gas or Charging Costs

Unless your commute happens to be from your bedroom to your home office, your vehicle is going to need energy to get you where you're going.

For a gas-powered vehicle, think about:

• Fuel efficiency
• How many miles you drive
• Your typical driving conditions

If you're considering an electric vehicle, think about where and how you'll charge it and how those costs fit into your household budget.

Fuel or charging expenses may seem small compared with a car payment, but they're recurring costs that should be part of your monthly car budget.

4. Routine Maintenance

Every vehicle needs regular care. Depending on your vehicle and its recommended maintenance schedule, expenses may include:

• Oil and filter changes
• Tire rotations or replacement
• Brake service
• Fluid checks
• Battery replacement
• Windshield wipers
• Other manufacturer-recommended maintenance

Fall is an especially useful time to think about car care. Seasonal maintenance guidance commonly recommends checking items such as fluids, wiper blades, lights and batteries as colder weather approaches. Fall Car Maintenance - Prepare for October Car Care Month also notes that tires and other seasonal vehicle checks deserve attention.

Instead of treating maintenance as an unexpected expense, consider including a small amount for vehicle maintenance in your regular budget.

5. Unexpected Repairs

Routine maintenance can help keep your vehicle in good condition, but unexpected repairs can still happen. That's where having emergency savings can make a difference.

Rather than relying on a credit card when an unexpected repair pops up, consider setting aside money specifically for vehicle expenses.

You could include your vehicle fund as part of your larger emergency savings strategy or establish a separate savings goal for future repairs.

Even if you don't need the money immediately, gradually building a cushion can make future car expenses feel less disruptive to your budget.

6. Registration, Taxes and Other Fees

Some car expenses don't happen every month, which makes them particularly easy to overlook. Depending on where you live and your specific vehicle, you may encounter expenses related to:

• Registration
• Vehicle taxes
• Title costs
• Inspection requirements
• Other state or local fees     

Because these aren't necessarily monthly expenses, consider dividing your expected annual costs across your monthly budget.

For example, if you know a recurring vehicle expense will come due later in the year, saving a little each month can make it easier to handle when the bill arrives.

7. Depreciation

Depreciation isn't a bill you'll receive in the mail, but it's still part of the economics of owning a vehicle. Simply put, depreciation is the decline in your vehicle's value over time.

This can become especially important when you want to sell or trade in your vehicle.

If you owe more on your auto loan than your vehicle is worth, you may have what's commonly referred to as negative equity. That can complicate your next vehicle purchase if you want to trade the vehicle before your existing loan is paid off.

Thinking long term when choosing a vehicle and loan can help you consider not only today's payment but your future plans as well.

How Can You Estimate Your True Monthly Car Budget?

A simple way to start is to list every vehicle-related expense, rather than focusing solely on the loan. Your budget might include:

• Auto Loan: Payment, APR and term
• Insurance: Monthly or annual premium
• Fuel/charging: Driving habits and efficiency
• Maintenance: Regular service and tires
• Repairs: Savings for unexpected expenses
• Registration/fees: Annual or recurring costs
• Depreciation: Long-term vehicle value

Next, consider how that total fits with the rest of your monthly expenses and financial goals.

You still need room in your budget for housing, food, savings, debt payments, emergencies and everything else life brings.

A car that fits your needs without consuming all of your financial breathing room may ultimately be more valuable than one that simply fits the maximum payment you could make.

Is a Cheaper Car Always Less Expensive to Own?

Not necessarily. Purchase price is important, but it's only one factor in your total cost of ownership. Two similarly priced vehicles could have very different:

• Insurance premiums
• Fuel efficiency
• Maintenance needs
• Repair costs
• Resale values

That's another reason to research vehicles beyond their sticker prices.

When comparing cars, consider asking:

"What will this vehicle cost me to own, not just to buy?"

That one question can change the way you evaluate your options.

How Can You Lower Your Car Ownership Costs?

You may not be able to control every vehicle expense, but there are ways to make car ownership easier on your budget.

Choose Your Vehicle Carefully

Consider fuel economy, estimated insurance costs and anticipated maintenance as part of your vehicle research.

Stay Current on Maintenance

Following the manufacturer's recommended maintenance schedule may help identify maintenance needs before they become larger concerns.

Review Your Financing

Compare APR, loan terms, monthly payments and the total cost of borrowing when evaluating an auto loan.

Build Vehicle Expenses Into Your Budget

Set aside money for predictable costs such as registration and maintenance instead of waiting for them to arrive.

Maintain Emergency Savings

Having savings available for an unexpected repair can help protect the rest of your monthly budget.

Frequently Asked Questions About Car Ownership Costs

What expenses should I budget for besides my car payment?

Consider insurance, fuel or charging, routine maintenance, repairs, registration, taxes and fees in addition to your monthly auto loan payment.

How much should I budget for car maintenance?

There isn't one amount that's right for everyone. Maintenance costs depend on the vehicle's age, mileage, condition and manufacturer recommendations. Reviewing your vehicle's maintenance schedule can help you anticipate upcoming expenses.

Does insurance count when calculating how much car I can afford?

It should. Insurance is part of your overall vehicle cost, so considering the premium before purchasing a vehicle can give you a more realistic view of affordability.

Is a lower monthly car payment always better?

Not necessarily. A lower monthly payment can sometimes result from extending the loan over a longer period. Compare the APR, term, monthly payment and total cost when evaluating financing.

Should I have savings specifically for car repairs?

Including expected and unexpected vehicle expenses in your savings strategy can help you prepare for repairs without disrupting your regular monthly budget.

How can I lower the total cost of owning a car?

Start by considering the full picture when choosing a vehicle. Purchase price, financing, insurance, fuel efficiency, maintenance and long-term ownership all influence the overall cost.

Look Beyond the Monthly Payment

Owning a car involves much more than making a loan payment each month.

When you account for insurance, fuel, maintenance, repairs, registration and other costs, you get a more realistic picture of what a vehicle will mean for your budget.

That perspective is valuable whether you're maintaining the car you already own or preparing to shop for your next one.

And when you're ready for your next vehicle, consider talking with your credit union about your auto financing options before you shop. Understanding what you can comfortably afford and getting pre-approved can help you approach the buying process with a clearer budget and greater confidence.