(WEHT)— On average, it costs $9,666 annually to own a vehicle which breaks down to $805.50 each month. These figures come from the latest data from AAA.
AAA found the biggest factor accounting for this nearly $10,000 yearly expense is depreciation. This makes up 40% of all expenses for car owners, exceeding costs like gas and maintenance.
Since the semiconductor chip shortage is causing low inventory at dealerships, AAA is encouraging people shopping for a car to be aware of all the expenses so they can negotiate the best deal for their budget.
“Consumers are paying more for just about everything this year, and cars are no exception,” said Mike Hoshaw, vice president of automotive services, AAA East Central. “The cost of owning a vehicle goes far beyond the sticker price on the window. Expenses including depreciation, fuel, maintenance, and insurance can quickly add up.”
The 2021 AAA Your Driving Cost study reviewed nine categories of vehicles to determine the average annual operating and ownership costs of each. AAA selected 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. Key findings of this year’s Your Driving Costs include:
- Fuel Costs: on average, fuel costs 10.72 cents per mile. This is based on data from May 2020 – May 2021, which does not include recent spikes in gas prices. Fuel costs vary widely by vehicle type, ranging from a low of 3.66 cents per mile for electric vehicles, to 15.81 cents per mile for pickup trucks.
- Maintenance, repair and tire costs: on average, maintenance and repair costs 9.55 cents per mile. Just like fuel, electric vehicles are on the lower end of the spectrum, costing 7.70 cents per mile, while medium sedans are the most expensive at 10.43 cents per mile.
- Finance charges: the cost of vehicle loans decreased due to a drop in the prime lending rate. The average interest rate in 2021 is 4.12%, which is 1.056 percentage points lower than last year.
As part of the Your Driving Costs study, AAA found over the past several years, buyers have moved away from previously popular categories like sedans to newer styles like compact SUVs. For 2021, AAA added two new categories: subcompact SUVs and midsize pickup trucks. These replaced large sedans and minivans, both of which no longer offer enough new models for AAA to track.
The average price of a new vehicle for 2021 is $32,903, which is $1,502 (4.78%) higher than last year but is mostly due to the addition of new models to the Your Driving Costs study. Pickup trucks saw an increase of $4,684 (an average of 11%); however, this has not affected their popularity, as they remain the best-selling category of those included in the study.
Buying a car is the second biggest purchase behind a home that most people will make in their lifetime. Here is AAA’s guidance for shopping for your next vehicle:
- Before considering any specific makes or models, consumers should determine what makes sense for their budget including trade-in value and down payment amount.
- Another important consideration is whether to finance or lease. For someone who is an early adopter of new technology, likes to change cars often or doesn’t put a lot of annual miles on a vehicle, leasing may make more sense. Consumers should evaluate both options and pick the one that will best suit long-term needs.
- Look at pricing options for both new and slightly used vehicles. New vehicles typically come with longer warranties and buying incentives from the automaker. When it comes to used vehicles – there are two types to choose from – certified pre-owned and used. The advantage of a certified pre-owned vehicle 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 manufacturer’s warranty.
- Consumers should test drive the exact model of the car they want to purchase. If possible, they should pick a route that mirrors their daily driving routine. It is a good idea to test the car’s ride quality and handling on a number of different road surfaces: city streets, hills, freeways and winding roads.