Car ownership is getting more expensive. The latest Your Driving Cost study from the Automobile Association of America (AAA) finds that the cost to own and operate a new vehicle rose to $12,297 annually, or just over $1,000 per month. This is an increase of $115 compared with 2023. Experts said the increase is due to higher depreciation and finance charges. 

“Buying a new car can be exciting,” said Greg Brannon, AAA’s director of automotive research. “But consumers should fully understand all the costs of owning and operating a new vehicle—from purchase to resale.”  

He added that AAA advisers recommend considering various factors when owning a car, such as deprecation. He noted that the average car loses $4,680 annually in depreciation costs, with large vehicles taking the biggest hit in depreciation. 

The sales-weighted average manufacturer’s suggested retail price for new vehicles in the study was $38,883, an increase of 0.7 percent over last year. Bannon noted this does not always reflect the actual purchase price, which can vary based on demand. 

Finance charges can also have a significant impact on the average yearly cost of a vehicle. The survey noted the average annual finance charge on a vehicle is just over $1,300, a 6 percent increase compared with 2023. 

Electric vehicles have also experienced a marked increase in ownership costs due to deprecation, now ranking second-highest due to increasing purchase prices and finance charges. 

Overall, however, EVs maintain the highest level of fuel cost savings, averaging 15.9 cents per kilowatt-hour, and have among some of the lowest maintenance costs according to the survey. 

Hybrid vehicles have the second-lowest total ownership costs behind small sedans. Excellent fuel economy and low maintenance costs, keep it within the middle in terms of depreciation financing and insurance costs. 

“Hybrid vehicles are a reasonable, affordable option for those who want to try the benefits of electrification,” said Brannon. “Hybrids benefit from excellent fuel economy, low maintenance costs, depreciation and insurance—making them an affordable option for car buyers.”