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Published: Aug 19, 2021 4 min read
Car With A Oversized Price Tag
Money; Getty Images

The price you pay for a new vehicle is just a fraction of the overall cost of owning a car. And those overall costs are on the rise — now running close to $10,000 per year, on average.

Once you add up expenses like car insurance, gas, maintenance, registration and finance charges related to loans, and then factor in depreciation (yes, this is a very real cost), the average cost of new vehicle ownership adds up to $9,666 a year, according to a new AAA report.

That figure represents an all-time high — unsurprising given that car prices generally trend upward — and an increase of $105 over last year's average car ownership cost ($9,561), per AAA.

What may be particularly alarming to household budgets is the fact that car ownership costs are rising even as auto insurance rates remained flat or even dropped due to decreased driving during the pandemic. Financing charges related to auto loans are down as well, due to a decrease in the prime lending rate.

What's more, the ownership cost estimates are based on the 12-month period ending in May 2021, which was before gas prices spiked nationally.

In other words, the new AAA study probably significantly underestimates how much it costs to own a new vehicle right now.

Obviously, the costs related to car ownership can vary widely, starting with the upfront price you pay for the vehicle. For the one-year period covered in AAA's latest study, the average price for a new car was $32,903, up over $1,500 compared to a year ago ($31,401).

More recently, the summer car buying season has caused average prices to skyrocket. The average price paid for a new car during the month of July 2021 hit a record high of $42,736, according to Kelley Blue Book. That's up a whopping $3,223 over the dismal car dealership sales days of July 2020.

Meanwhile, the average new electric vehicle now runs over $51,000, and the average luxury car buyer paid just under $58,000.

The AAA study creates its estimates assuming that owners lease the vehicle or get a loan for the car rather than pay cash, so financing costs are factored in. The terms of your loan and how much you drive will have a big impact on your overall car ownership costs. So will the price you pay for auto insurance, which can soar if you're a reckless driver or even if you just have bad credit.

One classic way to lower the cost of owning a car is to drive an older used vehicle. The strategy will still save you money, but unfortunately it's not as easy or simple as it's been in the past. That's because demand for used cars rose steeply during the pandemic, and average used car prices have hit an all-time high as well.

More from Money:

10 Best Car Insurance Companies of August 2021

The Push for Electric Vehicles Could Affect How Much Your Next Car Costs

7 Things That Are Getting More Expensive in 2021