Owning a Car Now Costs $12,863 a Year

Ask someone what their car costs and they will quote the payment. It is the number that leaves the account on a fixed day, so it feels like the answer. The average cost to own a car is more than double that, and most of the difference never arrives as a bill you can look at.

AAA has run this study since 1950. The 2026 number is $12,863.

What is the average cost to own a car, line by line?

Six categories, and the largest one is invisible.

AAA publishes the headline figure each September and the full category split alongside it. The 2026 study raised the total to $12,863 and put depreciation at $4,422, but it also folded EVs and hybrids into the standard vehicle categories for the first time. So the category detail below comes from the 2025 edition, where the six lines add to $11,577 after rounding. Read it as the shape of the bill rather than this year's exact figures: depreciation led in both years, and every category above fuel is a cost people forget when they quote their payment.

Notice what the loan payment covers and what it does not. Finance charges are the interest, $1,131 a year. The principal you repay is not a cost in AAA's frame, because the money converts into an asset. Depreciation is the cost, and it measures how much of that asset drains away while the car sits in the driveway.

Why is depreciation the cost nobody budgets?

Because nothing invoices you for it.

Depreciation is the gap between what you paid and what the car is worth when you sell or trade it. AAA measures it across five years and 75,000 miles. At $4,422 a year it outweighs fuel, outweighs insurance, and outweighs maintenance. You meet it once, at trade-in, when the dealer names a number that feels like an insult and reflects the market.

This is why a new car and a used car can carry identical payments and very different true costs. The steepest part of the depreciation curve happens in the first two or three years. Buy at year four and someone else has already eaten it.

The same blind spot explains why the monthly-payment question is the wrong one. Dealers compete on payment size because payment size is what buyers ask about, and a longer loan shrinks the payment without shrinking anything else. Stretch the term to 84 months and the monthly number drops, the interest total climbs, and the borrower spends years owing more than the car is worth. Negative equity then rolls into the next loan. The payment looked affordable at every step, and the balance never did.

What share of a paycheck does a car eat?

Depends on the paycheck, which is the whole point.

Car cost held at AAA's 2026 figure of $12,863. Income figures are gross, before taxes. Federal minimum wage has been $7.25/hour since 2009 (U.S. Department of Labor). Full-time assumes 40 hours, 52 weeks.

That last row is not a rhetorical trick. It is the arithmetic of a country where most jobs are unreachable without a car and the wage floor has not moved in seventeen years. A worker at the federal minimum cannot own the average new car under any budgeting discipline, which is why that worker drives something fifteen years old with repair bills that keep climbing.

Nor does the burden fall evenly across the map. A driver in a dense city with functional transit can go without a car and lose a few hours a week. Across most of the country that option does not exist: no bus reaches the warehouse at 5am, no train serves the hospital where the shift starts at 7. For those households the $12,863 is not a purchase decision. It is a cover charge for the labor market, paid before the first hour is worked, and it lands hardest on exactly the people whose jobs cannot be done from home.

The market has already registered the strain. New-vehicle transaction prices crossed $50,000 on average in August 2026 (Kelley Blue Book), average new-car payments reached about $765 a month in Q2 2026, and roughly 18% of new car loans now carry payments above $1,000 a month (Experian). New York Fed household debt data shows auto loan balances 90 or more days delinquent running near 5.5% in 2026, a record for that series. Fitch reported subprime borrowers 60 or more days past due hitting their highest level in more than three decades.

Is a used car cheaper to own?

Yes, and less so than it used to be.

Average used listing prices topped $27,000 in mid-2026, up about 6% year over year, with average used payments near $531 a month against roughly $765 for new. The used buyer skips the worst depreciation and inherits the repair curve instead, which now runs 40% to 45% above 2019 levels by BLS measure.

The used buyer also inherits a worse loan. Lenders price used paper higher than new, terms run shorter, and a buyer with damaged credit can land double-digit interest on a car that will need a transmission before the note is paid. Insurance does not fall as far as people expect either, because liability is priced off the driver and the roads rather than the vehicle, which is one reason dropping coverage feels like the only lever left to so many households.

The cheap used car, the $4,000 commuter that got a generation to work, has stopped existing in most markets. The 2020–2022 supply shock pulled the whole used market up a rung and it never came back down. We trace that in why cars are so expensive, and what it did to monthly budgets in the average car payment.

Why did cheap transportation disappear?

Because every input repriced at once and none of them asked what a household could pay.

Vehicles got heavier, more powerful and more electronic, which raised both the sticker and the repair bill. Insurers repriced around those repair bills, driving a 22% single-year jump in premiums. Interest rates raised the finance line. Gasoline averaged $4.152 a gallon in AAA's 2026 study window, up 31.8% from the prior year. Manufacturers discontinued the entry-level segment because margins on trucks and SUVs are better.

Every one of those decisions is rational for the firm making it. Stacked together they produced a $12,863 annual precondition for holding a job in most of the United States, with no transit alternative across the majority of the country's land area and population. The car is one column in a household ledger where housing, healthcare, childcare and food all repriced the same way, and where the distance between what work pays and what living costs is the only number that explains all of them at once.

Treat the car as infrastructure and the numbers start making sense. Other wealthy countries built the network and charged everyone a little through taxes. The United States built roads, skipped the network, and handed each household a $12,863 annual invoice for the vehicle that fills the gap. That invoice has risen every year while the wage floor underneath it has not moved since 2009.

Record auto delinquencies are what that mismatch looks like on a balance sheet. The fifteen-year-old car in the driveway is what it looks like in a driveway. Neither is a budgeting failure, and no amount of shopping around closes a gap that opened over seventeen years of one number moving and the other standing still.