The True Cost of Driving

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Contributor, Benzinga
September 15, 2022

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It’s no secret that driving is expensive. But you might not recognize the hidden costs associated with sliding behind the wheel. These costs can be thousands of dollars annually, making it one of the most costly forms of transportation.

The true cost of driving includes more than just the price of gas and oil changes. Many other factors influence the cost of your daily commute. These expenses include insurance, maintenance, taxes and registration fees.

The True Costs Associated With Driving

Driving is necessary for most people, but it is also costly. Owning a car and driving it can cost a lot of money. Many people do not realize how much a car costs each month, let alone over a year. 

The true cost of driving is multifaceted. It includes fuel, maintenance, repairs, insurance, registration, taxes, depreciation and loan interest — there are many hidden costs of car ownership that most people do not consider.

Here are some of the direct costs of owning a car:

Loan Costs

Your car loan costs depend on your credit score, loan length, vehicle type and down payment. The cost of a car loan includes the annual percentage rate (APR), which is the total cost of borrowing over a year, including interest and fees divided by the total amount borrowed.

In addition to the interest rate on your loan, there is also an origination fee and closing costs of taking out a car loan. These fees vary across lenders but can add up quickly if you do not consider them when comparing loans.

License and Registration

Vehicle license and registration fees differ in each state. Some states charge a flat fee, while others base rates off your age, the car’s weight, the car's value and other factors. 


You can calculate around 9 cents per mile in maintenance costs like oil changes, tire rotations, air filters, batteries and repairs. This number varies depending on the car and how much you drive. You should expect to spend more if your vehicle is older than 10 years or has more than 150,000 miles.


Gas prices vary by state, and some vehicles are more fuel-efficient than others. On average, Americans spend over $250 per month on fuel. Driving in stop-and-go traffic increases your fuel consumption considerably. If you drive at constant speeds on the highway, you will use less gas.


Another significant expense is your car insurance. If you have had several accidents or tickets over the years, your premiums are likely to be higher than those of someone who has been accident-free for decades. On average, the annual cost is $1,553. However, many factors influence the price, such as your age, driving experience, location, vehicle type, credit history and discount availability.  


Cars depreciate over time, but by how much? The answer depends on the vehicle’s make, model, mileage, condition and color. A new car loses between 20% and 25% of its value in two years. After five years, the depreciation rate can be more than half.

Costs of Driving by Vehicle

According to AAA, the cost per mile varies by vehicle. Below, you can see how the ownership cost per mile changes by vehicle type when driving 10,000 miles annually. Ownership costs include  fuel, maintenance, repairs, license, registration, taxes, finance charges and depreciation.

VehicleTotal Ownership Cost per MileCost per DayCost per Year
Small sedan60 cents$16.60$6,060
Medium sedan75 cents$20.51$7,487
Large sedan90 cents$24.64$8,994
SUV (front-wheel drive) small72 cents$19.68$7,182
Minivan87 cents$23.85$8,705

At the time of the survey, gas prices were $2.68 per gallon, considerably lower than they were in August.

Small sedan: A small sedan like a Honda Civic or Toyota Corolla would cost almost 17 cents per mile in operating costs —  fuel, maintenance and repairs. In addition, you would need to pay $1,328 annually for insurance. Your license, registration and taxes would cost $466. The financing charge would come to $546. Finally, annual depreciation would be $2,240. The yearly cost is $6,060 if you drive 10,000 miles. 

Medium sedan: A medium sedan like a Toyota Camry or Honda Accord would cost 18 cents per mile in fuel, maintenance and repairs. Annual insurance premiums would add up to $1,251 and $661 in registration fees. Depreciation would be $3,169. After financing of $794, you would pay $7,487 in one year.

Large sedan: The operating costs for a large sedan are 22 cents per mile. Some large sedans include the Nissan Maxima, Ford Taurus and Toyota Avalon. Your annual license and registration charges come to $807. Then, you would pay $1,221 for full-coverage car insurance. With depreciation at $4,061 and a finance charge of $975, you would pay $8,994 in total annually. 

SUV: A small SUV would have baseline operating costs of 18 cents per mile. Some small SUVs include the Ford Escape, Toyota RAV4 and Nissan Rogue. Your additional expenses include $1,089 for insurance, $630 in registration and licensing fees, $3,132 in depreciation and a $766 finance charge. Altogether, the annual cost for driving 10,000 miles would be $7,182.

Minivan: Minivans like the Honda Odyssey and Dodge Grand Caravan have operating costs of 21 cents per mile. Next, you would pay $1,103 for insurance, $769 in registration fees and a $927 financing charge. Depreciation comes to $4,036. Overall, your yearly expenses would add up to $8,705.

How to Save Money on Car Insurance

Car insurance is the most critical part of owning a car. Without it, you cannot legally drive your vehicle on the road. You must ensure you have enough coverage to protect yourself in case of an accident or other incident. However, the best car insurance can be expensive. Try the tips below if you want to save on your auto insurance policy. 

Increase Your Deductible

Your deductible is what you pay after a claim before your insurance company starts paying. If you increase your deductible, you will pay less for coverage in case of an accident. But you will also be responsible for paying more out-of-pocket if you have an accident. If your driving record is good and you can afford to pay more if you have an accident, raising your deductible could help minimize your premium expenses.

Remove Coverages You do not Need

If there are certain coverages on your policy that you do not think you need, it may be possible to remove them. For example, suppose your vehicle has been paid off for several years and is worth considerably less than its original value. In that case, it may not make sense for you to keep comprehensive collision coverage, which pays for damage after an accident. You can add these kinds of coverages back later if necessary.

Shop Around

One of the easiest ways to save money on insurance costs is to shop around and compare rates and policies in your area. Rates fluctuate constantly, so if one company offers excellent coverage at an affordable rate now, there is no guarantee it will be that way down the road. Shop around for a new insurer every six months or so.

Use a Payment Plan That Provides Discounts

Use a payment plan that provides discounts if you pay in full upfront versus making monthly payments over time. Not all car insurance companies offer payment plans, but those that do often provide discounts for customers who use them. The exact amount varies by company, but it can be around 15% off your premium. You may also be able to save money by setting up automatic payments from your bank account.

Bundle With Other Policies

You might also be able to get a discount by combining multiple policies into one package with an insurer that offers bundling discounts. If you have home or health insurance through the same company as your car insurance, it is usually cheaper to bundle them together. The main benefit of bundling is that one policy can cover multiple vehicles and drivers, reducing each policy's cost.

Budgeting for Vehicle Maintenance

While it is easy to understand the importance of having adequate auto insurance, drivers often overlook other expenses. While driving is necessary for many people, you can minimize the costs of owning and operating your car by being diligent with maintenance. 

When you take care of your vehicle, you will save money on repairs and avoid costly accidents in the long run. The cost of maintaining a vehicle depends on where you live, the make and model of your car and how many miles you drive each year. However, there are some basic expenses that all vehicle owners will face at some point in their ownership.

Oil Changes

The average oil change costs $20 to $50, depending on the brand and how often your vehicle needs one. Typically, you need an oil change every 3,000 miles or three months, whichever comes first. If you drive under 10,000 miles annually, you will probably only need one or two oil changes. 

But if you drive over 15,000 miles annually, expect to pay more than $100 each time you visit the shop for an oil change if your vehicle requires synthetic oil or other specialized additives that cost more than conventional motor oils.

Milestone Services

Your car will reach several milestones during its lifetime, from when it is new until it gets 100,000 miles. These milestones require specific vehicle maintenance procedures and parts replacements or significant services. Some manufacturers require these services only once every 10 years or 100,000 miles.

Unexpected Repairs

An older car with more than 100,000 miles could pay $300 to $400 for minor repairs like replacing belts or hoses. On the other hand, major problems like transmission replacements or engine overhauls can cost much more — $1,000 to $2,000 or more for the average vehicle. While these may be rare, they are inevitable. 

It is impossible to predict exactly when something will go wrong with your car. Still, if you have some money set aside just in case something does break unexpectedly, you will be better prepared financially to deal with it when it happens.

Replacing Tires

Rotating tires helps ensure even tire wear and extends the life of each tire. Rotating tires also prevents uneven wear patterns that could damage them prematurely. Tire rotation costs around $15 to $20 per tire (prices vary depending on where you live). When your tires reach their life expectancy, they need to be replaced with new ones before they fail. Otherwise, you could face unsafe driving conditions if ignored for too long.

Emissions Inspections

You should also consider getting an emissions inspection if your state requires one. Many states require emissions inspections, so even if your area does not, it might be worth getting one just in case something goes wrong. The cost of an emissions inspection varies by state, but it generally costs between $30 and $80 depending vehicle (SUVs tend to cost more).

How to Save Money on Gasoline

Gas prices are high, and they are not going down anytime soon. But the good news is that you can save money on gas by making simple changes to your driving habits and routine. 

Here are a few tips for saving money on gasoline:

Use a gas card or rewards points: If you have a credit card that offers points or cash back for gas purchases, use it. Most cards give you 1% back per dollar spent on gasoline purchases. You might not think it’s much, but it adds up over time. Some cards allow you to redeem your points for gift cards or other perks.

Drive safely, slowly and defensively: Driving at higher speeds uses more fuel than driving at lower speeds. Avoid accelerating when going up hills, and avoid hard braking. Also, ensure you adequately inflate your tires and tune your vehicle regularly.

Service your vehicle faithfully: Keeping up with oil changes and other routine maintenance can prolong your engine's life, which will improve its efficiency and ease future repairs.

Compare Auto Insurance

You will find many different insurance companies, each with its unique coverage options and rates. You may wonder how to compare them and find the best deal for you.

Benzinga has reviewed hundreds of different insurance providers and their policies to help you find the best company for your needs. Find a list of favorites below.

Frequently Asked Questions


Can you reduce depreciation on your vehicle?


Yes. You cannot stop your vehicle from depreciating, but there are ways to slow the process. The best way to reduce depreciation is to keep your car in top condition. When you take good care of your vehicle, it will last longer and hold its value better.

About Maurice Draine

Maurice Draine is a former insurance agent, broker, underwriter tech, and agent sales support rep with over 15 years of professional writing experience. Maurice helps insurance, financial, and various online and ad agencies, create the words that drive customers to their websites and keeps them there.