True Cost of Owning a Car Explained

Your car payment is only part of the story. The true cost of owning a car in the U.S. includes depreciation, fuel, insurance, maintenance, repairs, fees, and financing—and most people underestimate it. Here's what "true cost" means and how to plan for it.

TL;DR True cost = purchase/loan cost + depreciation + fuel + insurance + maintenance/repairs + fees (registration, taxes) over the time you own the car. For many vehicles, the payment is less than half of the real cost. See your true cost at autopremo.com.

Why "Payment" Is Misleading

Dealers love to talk monthly payment. A $400 payment sounds manageable. But that number ignores:

• Depreciation (often the biggest cost over 5 years)
• Fuel
• Insurance
• Maintenance and repairs
• Registration, taxes, and fees
• Interest (if you finance)

A $400 payment on a $28,000 car might look "affordable," but add $150/month in gas, $120 in insurance, $80 in maintenance, and $3,000 in depreciation per year, and you're at $700–$800+ per month in real cost. Planning only for the payment is how people become "car poor."

Calculate true cost for any car at autopremo.com.

The True Cost Breakdown

1. Purchase and financing

• Down payment (opportunity cost if you could have invested it)
• Loan principal and interest (total paid over the life of the loan)
• Taxes and registration (often due at purchase and annually)

The "price" you negotiate is just the start. Interest can add thousands over 5–7 years. Shorter terms and better rates reduce true cost.

2. Depreciation

The loss in value from the day you buy to the day you sell. For a typical new car in the U.S., that's often 50–60% over 5 years. On a $35,000 car, that's $17,500–$21,000 in depreciation alone—usually the single largest cost of ownership.

See how depreciation affects your car at autopremo.com.

3. Fuel

Depends on mileage, fuel type, and local prices. In the U.S., 12,000–15,000 miles per year is common. At 25 MPG and $3.50/gallon, that's about $1,680–$2,100 per year. Hybrids and EVs can cut this; heavy or inefficient vehicles increase it.

4. Insurance

Varies by driver, location, and vehicle. U.S. averages range from about $1,200–$2,000+ per year. Sporty, luxury, or high-theft models cost more. Always get quotes before you buy.

5. Maintenance and repairs

• Scheduled maintenance: Oil, filters, tires, brakes. Budget $500–$1,500+ per year for a typical car.
• Unexpected repairs: As the car ages, repairs rise. Setting aside $500–$1,000 per year for surprises is reasonable for many vehicles.

Skipping maintenance lowers short-term cost but increases long-term cost and risk.

6. Fees and taxes

• Sales tax (at purchase, varies by state)
• Registration and tags (annual in most states)
• Personal property tax (in some states)

These can add hundreds to over a thousand dollars per year depending on where you live.

True Cost Over 5 Years (Example)

Assume a $32,000 new car, 20% down, 6% for 60 months, 12,000 miles/year, 28 MPG, $3.50/gal, average insurance and maintenance:

Cost category5-year total (approx.) Loan (principal + interest)~$35,000 Depreciation~$16,000 Fuel~$7,500 Insurance~$7,000 Maintenance/repairs~$4,500 Registration/taxes~$2,000 Total~$72,000

The "sticker" was $32,000. The true 5-year cost is more than double. That's why planning only for the payment is dangerous.

Model your own scenario at autopremo.com.

How to Use True Cost When Buying

Compare cars by total cost, not payment. A lower payment with a longer loan and more interest can mean higher true cost.

Factor depreciation. Models that hold value better cost less to "own" over time.

Get insurance quotes for each car you're considering. Premiums vary a lot.

Plan for maintenance. Some brands and models cost more to maintain; factor that in.

Use a total-cost calculator before you commit. Autopremo.com's ownership cost tool helps you see the full picture.

True Cost by Vehicle Type (Ballpark)

TypeRelative true cost (5 years) Compact sedanLower (efficient, moderate depreciation) Midsize sedanModerate Compact SUVModerate to higher Truck / full-size SUVHigher (fuel, depreciation, insurance) LuxuryHigher (depreciation, insurance, maintenance) EVVaries (higher purchase, lower fuel; incentives and depreciation matter)

These are guidelines. Your mileage, location, and financing change the numbers. Autopremo.com lets you plug in your own assumptions.

What Most People Miss

• Depreciation is invisible. You don't write a check for it each month, but it's real. When you sell or trade, you feel it.
• Insurance is not optional. You have to carry it. Get quotes before you buy.
• Maintenance is not optional. Skipping it leads to bigger bills and lower resale.
• Interest adds up. A 2% rate difference can mean thousands over the loan. Shop rates and terms.

See every cost in one place at autopremo.com.

Your True Cost Checklist

Before you decide on a car:

• [ ] Total price and financing (term, rate) known
• [ ] Depreciation estimated (e.g., 5-year loss)
• [ ] Fuel cost estimated for your miles and local prices
• [ ] Insurance quoted for that exact vehicle
• [ ] Maintenance and repair budget set
• [ ] Registration and taxes (purchase + annual) included

Run the full calculation at autopremo.com.

Bottom Line

True cost of owning a car = purchase/loan + depreciation + fuel + insurance + maintenance/repairs + fees over the time you own it. The payment is often less than half of that. Plan for the full picture so you don't overcommit. Use autopremo.com to see true cost before you buy and to compare vehicles fairly.