Writer: Lucy Lazarony
Editor: Adam West
Reviewer: Ashley Fricker
Key Takeaways
Owning and operating a new vehicle costs an average of $12,863 in 2026 — or $1,071.92 per month — according to AAA’s Your Driving Costs analysis.
AAA’s 2026 estimate takes higher fuel prices, depreciation, and finance charges into account. For the first time, the analysis also includes select electric vehicles (EVs) and hybrids in AAA’s standard vehicle categories.
“By looking at EVs, hybrids and traditional gas-powered vehicles within the same categories, consumers can better understand how total ownership costs vary by powertrain,” said Greg Brannon, AAA’s director of automotive engineering.
AAA estimated the average annual cost of owning and operating a new vehicle at $11,577, or $964.78 per month, in 2025. Those figures are $1,286 less per year and $107.14 less per month than the 2026 estimate, but AAA cautions that methodology changes prevent a direct comparison.
EVs, Hybrids, and Gas Vehicles: Which Cost Less?
EVs and hybrids may save drivers money at the pump, but gas-powered vehicles generally cost less in finance charges, taxes, fees, and depreciation.
For example, a gas-powered medium sedan costs $10,582 per year to own — $3,080 less than a comparable electric medium sedan. The electric sedans had substantially higher depreciation, fees, and finance costs than their gas-powered counterparts.
EVs did have the lowest fuel costs. Charging costs were 66% to 70% lower than fuel costs for traditional gas vehicles. But in many cases, higher depreciation, fees, and finance costs outweighed those savings.
Hybrids offered something of a middle ground. They used less fuel without the higher costs associated with some EVs and were cheaper to own than gas-powered models in four vehicle categories.
High gas prices made the difference more noticeable.
“If gas prices go down, hybrids lose some of the comparative cost advantage,” Shivers explained. “But even in that case, the total ownership costs for gas and hybrid vehicles would likely remain similar.”
How Negative Equity Raises the Cost of a New Car
We asked Austin Shivers, automotive technical engineer at AAA, how rolling $5,000 to $10,000 in negative equity into a new loan would affect ownership costs. Negative equity means a buyer owes more on a vehicle than it is worth.
“Essentially, rolling in negative equity would be like adding that amount to the purchase price of the new vehicle,” Shivers said. “For a buyer with a near prime credit score, that might increase finance costs by 15% or so of the added principal, based on interest rates at the time our estimations were made.”
Why Depreciation Can Cost More Than Drivers Realize
The impact of depreciation on a car buyer’s wallet can be significant. It is also easy to overlook because it does not appear in the form of a monthly bill.
“Depreciation is typically the largest component of ownership costs and is probably the most overlooked,” Shivers said. “It doesn’t show up when you are making a loan payment or filling up the gas tank. But when you are finally ready to replace your car, it becomes a major factor.”
How to Keep Vehicle Ownership Costs Under Control
Before you start car shopping, figure out what you can afford each month and over the full year. Remember to include the costs of both owning and operating the vehicle.
When it is time to negotiate, discuss the vehicle price, financing rate, and trade-in value one at a time. It is also a good idea to get pre-approved by a bank or credit union before comparing the financing available through a dealer.
Your down payment and monthly auto loan payment should fit comfortably within the rest of your budget.
“They should make sure that the monthly loan payment is a number they can safely afford,” Shivers advises. “But they need to consider the totality of ownership costs, including fuel, maintenance, financing, taxes and depreciation.”
AAA has an online calculator that allows buyers to check estimated auto ownership costs using a specific vehicle, state of residence, driving habits, and credit score.
“Depreciation is typically the largest component of ownership costs and is probably the most overlooked. ... When you are finally ready to replace your car, it becomes a major factor.” — Austin Shivers, AAA
Car buyers should avoid stretching a loan beyond 60 months, according to Edmunds. Although a 20% down payment is ideal, buyers who cannot afford that amount should consider putting down around 10% and adding gap insurance or new-car replacement coverage.
Edmunds also advises buyers to complete their car shopping within about two weeks of getting pre-approved. Multiple auto-loan inquiries may still appear on a buyer’s credit report, but credit-scoring models generally treat inquiries made within a 14- to 45-day rate-shopping window as a single inquiry when calculating the buyer’s score.
People with bad credit can buy vehicles at buy-here-pay-here lots, but they should not overlook traditional dealerships. Kelley Blue Book says auto loans are available to people with bad credit through traditional dealerships, although the interest rates will typically be higher than those offered to borrowers with strong credit.
