As every car owner knows, cars are expensive to run. Before purchasing a vehicle, it’s important to understand just how much it will cost beyond the sticker price. According to the 2023 edition of the AAA's "Your Driving Costs," the average MSRP of a new car was $34,876, and the overall average cost to own and operate a new vehicle in 2023 was $12,182. Many different factors feed into the cost of owning a car: financing, depreciation, repairs and maintenance, insurance, and driving habits. Let's take a look at how you can save on these costs.

Financing

Credit unions consistently outperform banks by boasting the most competitive rates for both new and used car loans. 

New car loan, 48 months

• Credit unions: 6.27% APR

• Banks: 7.13% APR

New car loan, 60 months

• Credit unions: 6.40% APR

• Banks: 7.21% APR

Used car loan, 36 months

• Credit unions: 6.35% APR

• Banks: 7.46% APR

Used car loan, 48 months

• Credit unions: 6.46% APR

• Banks: 7.51% APR

(Based on NCUA’s March 2024 data) 

These incredible rates provide borrowers with significant savings over the course of their loans. Moreover, credit unions prioritize member satisfaction, tailoring loan terms to fit individual needs and financial situations. Beyond rates, credit unions often waive or minimize fees associated with car loans, ensuring a transparent and cost-effective borrowing experience. With a commitment to community and member empowerment, credit unions are the optimal partner for securing affordable and flexible financing for your next vehicle purchase.

Depreciation

Depreciation happens after the salesperson hands you the keys and you drive off the dealer's lot. Even before your new-car joyride is over, your car has lost value. The rate of loss can be considerable. In fact, AAA estimates your car’s value to depreciate 20%-30% in the first year. 

Maintenance and repair

The annual cost of maintenance and repairs for your car can vary significantly depending on the vehicle's make and model, age, mileage, and driving habits. However, car owners can expect to spend around $500 to $1,000 per year on routine maintenance like oil changes, tire rotations, and brake pad replacements. Additionally, unexpected repairs for issues such as engine problems, transmission issues, or electrical malfunctions can further add to the annual expenses, ranging from a few hundred to several thousand dollars. To mitigate these costs, regular maintenance, careful driving, and prompt attention to any emerging issues can help prolong the lifespan of your vehicle and reduce the likelihood of costly repairs.

Insurance

The annual cost of car insurance varies widely depending on several factors, including your age, driving history, location, type of car, and coverage levels. However, car owners can anticipate spending anywhere from $800 to $2,000 per year for insurance coverage. Factors such as a clean driving record, choosing a vehicle with safety features, and bundling policies with the same insurer can potentially lower premiums. Conversely, factors like a history of accidents or traffic violations, living in high-crime areas, and opting for comprehensive coverage can increase insurance costs. To ensure the best rates, it's advisable to shop around, compare quotes from multiple insurers, and consider factors beyond just the premium, such as deductibles and coverage limits.

Driving habits

How you drive can also make a massive difference in overall costs.

• Drive safely. Accidents always cost money, even if you're insured, and you'll be lucky if the consequences are limited to finances. Drive defensively and try to stay off the road late at night when accidents are most common.

• Keep tires inflated. This improves mileage, preserves tires, and decreases the chances of a dangerous blowout. Inflation pressures should be listed on the sticker inside the glove box or in the owner's manual.

• Drive mild, not wild. Accelerating slowly and coasting up to stoplights can save as much as 40% in fuel consumption. The higher your speed, the more fuel you will burn.

• Use cruise control. Tests showed a 4% to 14% improvement in mileage from this simple step. It may also prevent the dangerous speed creep that can lead to a costly speeding ticket, which may, in turn, increase your insurance costs.

• Drive less. This will reduce costs for gas, oil, maintenance, and depreciation.

• Don't drive. Think about carpooling, taking public transit, biking, or walking. After all, a gallon saved is $3 or more earned—and remember, fuel is only a small fraction of the overall cost of driving.