AAA's 2025 Your Driving Costs study did the math for us. The all-in cost of a small sedan driven 15,000 miles a year: $8,380 per year, or 55.87 cents per mile. A half-ton pickup? 98.54 cents per mile. At 15,000 miles a year, that's nearly $14,800 a year for the pickup — every year.
And here's the part most people get backwards: fuel is one of the smallest line items. For a small sedan, fuel is about 9.9 cents of that 55.87 cents per mile. The rest is depreciation, insurance, maintenance, and financing.
Where the Money Actually Goes (Small Sedan, per AAA)
| Cost | Per year | Over 10 years |
|---|---|---|
| Depreciation | $2,629 | $26,290 |
| Full-coverage insurance | $1,511 | $15,110 |
| Fuel (15k mi/yr) | ~$1,485 | ~$14,850 |
| Maintenance & tires | ~$1,535 | ~$15,350 |
| License, registration, taxes | $519 | $5,190 |
| Finance charges | $701 | $7,010 |
| Total | ~$8,380 | ~$83,800 |
That's the cost of a small sedan — the cheapest category AAA tracks. Buy a $35,000 car and you'll spend more than double that on the car itself over a decade.
Note: AAA's numbers assume a new vehicle kept 5 years. Real-world federal data agrees: the Bureau of Labor Statistics' 2024 Consumer Expenditure Survey found the average household spends $13,318 a year on transportation — 17% of all spending, second only to housing. Vehicle insurance alone averaged $1,993 per household, up 12.3% in a single year.
Depreciation: The Silent Killer
Depreciation is the single biggest cost of car ownership, and it's completely invisible until you sell. A new car loses roughly 20% of its value in the first year and about 15% per year after that for several years. That $40,000 SUV is worth about $25,000 after three years. You paid $15,000 for the privilege of driving it — whether you noticed or not.
This is also why mileage changes the per-mile math in a counterintuitive way. AAA reports about $1.00 per mile at 10,000 miles a year versus 66 cents at 20,000. Fixed costs (depreciation, insurance, registration) spread across fewer miles when the car sits. Driving less lowers your annual bill but raises the cost of each trip.
The Vehicle-Type Gap Is Enormous
AAA's 2025 per-mile figures, cheapest to priciest:
- Small sedan: 55.87¢/mile
- Hybrid: 63.94¢/mile
- Subcompact SUV: 66.11¢/mile
- Medium sedan: 66.37¢/mile
- Compact SUV: 68.53¢/mile
- Electric: 71.21¢/mile (cheapest maintenance, but highest depreciation)
- Midsize pickup: 79.11¢/mile
- Medium SUV (4WD): 83.89¢/mile
- Half-ton pickup: 98.54¢/mile
A household driving a pickup 15,000 miles a year spends roughly $6,400 more per year than one driving a small sedan the same distance. Over 10 years, that's $64,000 — enough to buy another car outright.
The 10-Year Math for Three Realistic Choices
Assume 15,000 miles/year, financing for 5 years, then owned outright:
| Choice | Purchase | 10-yr total cost | What you save |
|---|---|---|---|
| New $45k SUV (kept 10 yrs) | $45,000 | ~$120,000 | — |
| New $28k small sedan (kept 10 yrs) | $28,000 | ~$84,000 | ~$36,000 |
| 3-yr-old $20k sedan (kept 7+ yrs) | $20,000 | ~$65,000 | ~$55,000 |
The single highest-leverage move in car finance isn't negotiating the price — it's buying 2–3 years used and keeping the car 10+ years. You dodge the steepest depreciation years and eliminate the payment for half the decade.
Five Moves That Cut Your Car Bill the Most
- Buy used, 2–3 years old. Someone else absorbed the 20%-in-year-one hit.
- Keep it 10+ years. Years 6–10 are the cheapest years of any car's life: no payment, moderate maintenance.
- Right-size the vehicle. Every step up in size costs thousands per year. Do you need the pickup?
- Shop insurance annually. With average household premiums near $2,000 and rising 12%+ a year, this is the fastest bill to cut.
- Drive fewer miles. Each mile in a sedan costs about 56 cents all-in. A 2,000-mile reduction saves ~$1,100/year in wear alone.
FAQ
Q: What is the true cost of owning a car per year?
A: AAA's 2025 data puts a new small sedan at about $8,380/year (15,000 miles); the average U.S. household spends $13,318/year on all transportation per the BLS. Bigger vehicles run far higher — a half-ton pickup approaches $14,800/year.
Q: What costs more — depreciation or fuel?
A: Depreciation, by a wide margin. For a small sedan, AAA estimates $2,629/year in depreciation vs. ~$1,485/year in fuel.
Q: Is it cheaper to buy used or new over 10 years?
A: Almost always used (2–3 years old). You avoid the steepest depreciation years — a new car loses roughly 20% of its value in year one — while still getting a reliable vehicle you can keep for a decade.
Q: Do electric cars cost less to own?
A: On maintenance, yes — EVs are the cheapest category for maintenance and tires. But AAA found EVs currently have the highest depreciation, putting their all-in cost at 71.21¢/mile, above hybrids and sedans.
Q: How much does insurance add to car ownership?
A: About $1,511/year for a small sedan's full coverage per AAA, and the average household spends $1,993/year on vehicle insurance overall (BLS 2024), rising fast.
This article is for general information only and is not financial advice.
Tool tie-in: A "True Cost of Your Car" calculator (purchase price + miles + insurance + years kept → 10-year total) would fit this article perfectly.