Sticker Shock: The Cost of Owning a New Vehicle
What to Know About Buying a New Car in 2021 or 2022
More Than The Monthly Payment
According to the latest research from AAA, the average annual cost of new vehicle ownership is $9,666, or $805.50 per month. The biggest factor is depreciation, which accounts for 40 percent of all ownership expenses and even outpaces additional costs like fuel and maintenance. With low inventory at dealerships due to a semi-conductor chip shortage, AAA urges new car buyers to be aware of all expenses associated with ownership so they can negotiate the best deal for their budget.
“Consumers have to remember the expense of owning a car goes far beyond the monthly payment,” said Greg Brannon, AAA’s director of automotive engineering and industry relations.“ Plus, we are seeing costs increase for a number of products recently, and cars are no exception. This trend will likely continue as new vehicles come equipped with the latest technology, which naturally drives up the sticker price.”
Be Prepared: Research Your Car Buying Options
The car buying process is often seen as difficult, time-consuming and stressful. With strains on inventory this year, it is critical for consumers to do as much research as possible before beginning the buying process. Understanding all available options as well as prioritizing individual needs can ease some of the anxiety associated with purchasing a car. AAA offers the following guidance:
- Budget first: Before considering any specific makes or models, consumers should determine what makes sense for their budget, including possible trade-in value and down payment amount.
- Finance or lease your new car? For someone who loves new technology, likes to change cars often, or who doesn’t rack up a ton of annual miles on a vehicle, leasing might make more sense. You should evaluate both options and pick the one that will best suit your long-term needs.
- Extended vehicle loans: The loan terms offered as an incentive to buyers can be as long as 84 months, with interest as low as zero for those with high credit scores. This helps lower the monthly payment, but there will be a period of time when the vehicle will hold less value than what is owed due to depreciation.
- Certified pre-owned vehicles: The advantage here is the original owner has absorbed the majority of the depreciation cost, while the vehicle still has quite a few of the latest features and a limited manufacturer’s warranty.
- Always test drive: Choose a route that mirrors your daily driving routine, and also test the car’s ride quality and handling on a number of different road surfaces: city streets, hills, freeways and winding roads.
- Prepare for three separate negotiations: The price of the new vehicle, the trade-in value of your current vehicle, and finance rate (if applicable). Be sure to take your time and negotiate each of them individually.
Car-Buying Calculators and Tools from AAA
AAA offers a number of resources consumers can use while car shopping:
- AAA Car Guide: the Car Guide provides consumers with reviews highlighting how many advanced driver assistance systems (ADAS) are included in the vehicle as well as other criteria and information.
- AAA Car Buying Program: See what others paid by searching top brands online and get upfront, member pricing. Lock in member pricing with competitive price offers from local dealers. When you're ready, connect with your Certified Dealer to test drive and buy.
- AAA Interactive Driving Costs Digital Brochure (PDF): calculate your annual driving cost.
Average 2021 Car Ownership Costs At A Glance
- Sticker Price: $32,903 (Up $1,502 from 2020)
- Fuel: 10.72 cents per mile
- Maintenance: 9.55 cents per mile
- Interest Rate: 4.12 percent (Down 1.06 percent from 2020)
Survey Methodology
The 2021 AAA Your Driving Cost study reviewed 45 models across nine vehicle categories to determine the average annual operating and ownership costs. AAA selects top-selling, mid-priced models and compares them across six expense categories: fuel, maintenance/repair/tire costs, insurance, license/registration/taxes, depreciation, and finance charges. Fuel data reflects costs from May 2020 to May 2021.
