The costs of annual car ownership

According to AAA, the average cost of purely owning and driving a mid-sized sedan in the US is $8,876 as of 2014, broken into six categories below:

Payments / depreciation ($4,260)

Fuel costs ($2,130)

Interest ($976)

Insurance ($887)

Maintenance and repairs ($355)

Registration and taxes ($355)

Small sedans

Typical model: Chevrolet Cruze, Ford Focus or Honda Civic

Cost per mile for gas, maintenance and tires: $0.16

Total cost per year (assuming 15,000 miles driven a year): $6,957

Medium sedans

Typical model: Ford Fusion, Honda Accord or Toyota Camry

Cost per mile for gas, maintenance and tires: $0.19

Total cost per year (assuming 15,000 miles driven a year): $8,839

Minivans

Typical model: Dodge Grand Caravan, Honda Odyssey or Kia Sedona

Cost per mile for gas, maintenance and tires: $0.21

Total cost per year (assuming 15,000 miles driven a year): $9,753

Large sedans

Typical model: Chrysler 300, Ford Taurus or Nissan Maxima

Cost per mile for gas, maintenance and tires: $0.21

Total cost per year (assuming 15,000 miles driven a year): $10,831

Large SUV’s

Typical model: Ford Explorer, Jeep Grand Cherokee or Nissan Pathfinder

Cost per mile for gas, maintenance and tires: $0.23

Total cost per year (assuming 15,000 miles driven a year): $11,039

Luxury sedans and SUV’s

Typical model: Porsche Cayenne, Jaguar XK, GMC Sierra or Infiniti QX56

Cost per mile for gas, maintenance and tires: $0.31

Total cost per year (assuming 15,000 miles driven a year): $15,250

Now we have to add additional costs for speeding and traffic tickets. The National Motorists Association (NMA) suggests that Americans could spend up to $15 billion each year on traffic tickets, or 50 million traffic tickets. This comes out to about one $75 ticket per year, per American. The NMA also estimates that Americans will get one speeding ticket every six years that will lead to increased insurance surcharges costing around $300 per year amortized over your lifetime. We already accounted for insurance costs in the calculation above, so we won’t add this twice.

Traffic tickets ($75)

Now for parking. According to ABC, the average American spends $1,300 a year on parking costs, higher than insurance or maintenance.

Parking ($1,300)

The last cost is probably the one Americans ignore the most, and that’s the value of your time. Every hour spent behind the wheel with your attention on the road is time you could be spending exchanging emails from your smartphone, preparing notes for a meeting, reading news or researching a new topic. This is simply time of lost productivity. According to Bureau of Labor Statistics, the US Average Hourly Earnings Rate is $24.45 per hour, with the highest being utility services at $35.45 and the lowest being leisure and hospitality at $13.86. As of 2011, the national average one-way daily commute was 25.5 minutes, or 51 minutes per day, 4.25 hours per week, 17 hours per month, and 204 hours per year. Multiply that by the average earnings rate and we can see that the average American loses out on $4,987 earnings per year due to lost productivity in their daily commute. Let’s assume in the alternative option (Uber) the user is productive 50% of the trip, so we will discount the opportunity cost to $2,493 per year.

Opportunity cost ($2,493)

If we add all these costs up, we can see the average costs of owning a motor vehicle in the United States is around $12,744 per year ($1,062 per month). This falls in line with Consumer Reports who estimated median annual car costs to be $9,100 (not accounting for opportunity cost) — with small cars and Priuses around $5,000 and luxury cars and SUV’s around $16,000.