AAA Study: Owning a New Vehicle Costs Nearly $ 10,000 Per Year
(Fargo, ND) – According to the latest research from the AAA, the average annual cost of owning a new vehicle is $ 9,666, or $ 805.50 per month.
The most important factor that drives the annual price to pay is depreciation. It accounts for 40% of all property expenses, exceeding additional costs like fuel and maintenance. With low inventory at dealerships due to semiconductor chip shortages, AAA urges new car buyers to be aware of all the expenses associated with owning so they can negotiate the best deal for their budget.
“Consumers should remember that the expense of owning a car goes well beyond the monthly payment,” said Greg Brannon, director of automotive engineering and industry relations at AAA. “In addition, we are seeing an increase in costs recently for a number of products, and cars are no exception. This trend is likely to continue as new vehicles are equipped with the latest technology, which naturally increases the price of the sticker. ”
The 2021 AAA Your Driving Cost study looked at nine vehicle classes – made up of 45 models – to determine the average annual operating and owning costs for each. AAA selects the best-selling mid-priced models and compares them across six expense categories: fuel; maintenance / repair / tire costs; Assurance; license / registration / taxes; depreciation and financial charges.
Here are some other key findings from Your Driving Costs this year:
Fuel Costs: On average, fuel costs 10.72 cents per mile. This is based on data from May 2020 through May 2021, which does not include recent gas price spikes. Fuel costs vary widely by type of vehicle, 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 are 9.55 cents per mile. Much like fuel, EVs are on the lower end of the spectrum, costing 7.70 cents per mile, while mid-size sedans are the most expensive at 10.43 cents per mile.
Financial charges: The cost of auto loans has decreased due to the fall in the prime rate. The average interest rate in 2021 is 4.12%, 1.056 percentage point lower than last year.
As part of the Your Driving Costs study, AAA tracks changes in purchasing habits and modifies the type of vehicle categories considered to match these trends. For several years now, buyers have moved away from previously popular categories like sedans for newer styles like compact SUVs. For 2021, AAA has added two new categories: subcompact SUVs and midsize pickups. These have replaced large sedans and minivans, which no longer offer enough new models to follow.
The average price of a new vehicle for 2021 is $ 32,903, which is $ 1,502 (4.78%) more than last year, but this is mainly due to the addition of new models in the study Your driving costs. Models in the small sedan, midsize sedan, mid-size SUV and hybrid categories saw an average vehicle price increase of $ 3,064, led by hybrids, with consumers switching to larger (and therefore more expensive) models in this category. Pickup trucks saw an increase of $ 4,684 (an average of 11%); However, this did not affect their popularity, as they remain the top-selling category of those included in the study.
Buying a car is the second largest purchase behind a home that most people will make in their lifetime. The process of buying a car can be seen as difficult, long and stressful. With inventory strains this year, it’s critical that consumers do as much research as possible before starting the buying process. Understanding all of the options available as well as individual needs can alleviate some of the anxiety associated with buying a car. AAA offers the following tips when it comes to buying your next vehicle:
Before considering specific makes or models, consumers should determine what is right 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 drive a lot of annual kilometers on a vehicle, leasing may make more sense. Consumers should weigh both options and choose the one that best suits long-term needs.
Manufacturers and dealers sometimes offer extended loan terms to entice buyers. In some cases, these loans can last up to 84 months with interest as low as zero. Initially, a loan like this can be interesting for a buyer because it allows to reduce the monthly payment. However, consumers should be aware that with long term loans comes a period of time when the vehicle will be worth less than what is owed due to depreciation.
Examine the pricing options for new and lightly used vehicles. New vehicles usually come with longer warranties, purchase incentives from the automaker, the latest features, and are widely available. When it comes to used vehicles, you have the choice between two types of certified pre-owned and pre-owned vehicles. The advantage of a certified pre-owned vehicle is that the original owner absorbed the majority of the depreciation costs, while the vehicle still has some of the latest features and a manufacturer warranty.
Consumers should test drive the exact model of the car they want to buy. If possible, they should choose a route that reflects 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, highways and winding roads.
The most important thing to remember is that in most cases there are three separate negotiations that take place when buying a car: the price of the new vehicle, the trade-in value and the finance rate. , if applicable. The consumer must take his time and negotiate them individually.
Consumers can calculate their annual cost of driving by clicking here.